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o. 273 of 1951.
Appeal under articles 132 (1) and 134 (1)(c) of the Constitution of India from the Judgment and Order dated I3th October, 1950, of the High Court of Judicature at Patna (Shearer, Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous Judicial Case No. 220 of 1949.
S.K. Mitra (K. Dayal, with him), for the appellant.
Basant Chandra Ghosh and Arun Chandra Mitra for the respondent.
May 26.
The Court delivered judgment as follows: MAHAJAN J.
This appeal has been preferred by the State of Bihar against the judgment of a Special Bench of the High Court of Judicature at Patna allowing the application of the respondent under section 23 of the Indian Press (Emergency Powers)Act, XXIII of 1931.
It appears that the petition was argued by both the sides as it was one made under article 926 of the Constitution.
The respondent was the keeper at all relevant times of the Bharati Press at Purulia, A pamphlet under 85 656 the heading "Sangram" was printed at the said press and is alleged to have been circulated in the town of Purulia in the district of Manbhum.
The Government of Bihar considered that the pamphlet contained objectionable matter of the nature described under section 4 (1) of the Indian Press (Emergency Powers) Act and required the press to furnish security in the sum of Rs. '2,000, under section 3(3) of the Act by the 19th September, 1949.
On the 26th September, 1949, the respondent applied to the High Court under section 23 for setting aside the above order.
This application was allowed by the majority of the Judges constituting the Bench.
Shearer J. was of the view that the application should be dismissed.
Several objections were raised to the validity of the order passed by the Bihar Government but it is unnecessary to mention all of them.
The two points which were seriously pressed before the High Court were that the leaflet did not contain any words or signs or visible representation of the nature described in section 4 (1) of the Act, and that the provisions of section 4 (1) of the Act were inconsistent with article 19 (1) of the Constitution and as such void under article 13.
The High Court reached the conclusion that the pamphlet did come within the mischief of the Act.
Sarjoo Prosad J., with whom Ramaswami J. concurred, on a construction of the decisions of this Court in Romesh Thapar vs The State of Madras(1), and Brij Bhushan V.
The State of Delhi(2), found, though with some reluctance, that section 4 (1) (a) of the Act was repugnant to the Constitution and therefore void.
Mr. Justice Shearer, however, held that the pamphlet was a seditious libel and that there was nothing in the two decisions of the Supreme Court referred to above which compelled the court to hold the provisions of section 4 (1) (a) of the Act to be void.
In my opinion, Shearer J. was right in the view that there is nothing in the two decisions of this Court which bears directly or indirectly on the point at issue in the present case and that both Sarjoo Prosad (1) [1950] S.C.R.594.
(2) ; 657 and Ramaswami JJ.
were in error in holding that these deci sions were conclusive on the question of the invalidity of clauses (a) and (b) of section 4 (1) of the Act.
Towards the concluding part of his judgment Sarjoo Prosad J. ob served as follows: "I am compelled to observe that from the above discus sions of the Supreme Court judgments, it follows logically that if a person were to go on inciting murder or other cognisable offences either through the press or by word of mouth, he would be free to do so with impunity inasmuch as he would claim the privilege of exercising his fundamental right of freedom of speech and expression.
Any legislation which seeks or would seek to curb this right of the person concerned would not be saved under article 19 (2) of the Constitution and would have to be declared void.
This would be so, because such speech or expression on the part of the individual would fall neither under libel nor slander nor defamation nor contempt of court nor any matter which of fends against decency or morality or which undermines the security of or tends to overthrow the State.
I cannot with equanimity contemplate such an anomalous situation but the conclusion appears to be unavoidable on the authority of the Supreme Court judgments with which we are bound.
I, there fore, wish that my decision on the point would sooner than ever come to be tested by the Supreme Court itself and the position reexamined in the light of the anomalous situation pointed out above.
It seems to me that the words used in the Constitution Act should be assigned a wide and liberal connotation even though they occur in a clause which pro vides an exception to the fundamental right vouchsafed under article 19 (1)(a) of the Constitution Act." These observations I speak with great respect disclose a complete lack of understanding of the precise scope of the two decisions of this Court referred to above.
Section 3 (3) of the Act under which the notice was issued in the present case enacts as follows: "Whenever it appears to the Provincial Government that any printing press is used for the purpose 658 printing or publishing any newspaper, book or other document containing any words, signs or visible representation of the nature described in section 4,sub section (1), the Provin cial Government may, by notice in writing to the keeper of the press . .order the keeper to deposit with the Magis trate security . " Clause (a) of section 4 (1) deals with words or signs or visible representations which incite to or encourage, or tend to incite to or encourage the commission of any offence of murder or any cognizable of fence involving violence.
It is plain that speeches or expressions on the part of an individual which incite to or encourage the commission of violent crimes, such as murder, cannot but be matters which would undermine the security of the State and come within the ambit of a law sanctioned by article.
19(2) of the Constitution.
I cannot help observing that the decisions of this Court in Romesh Thapar 's case(1), and in Brij Bhushan 's case(2) have been more than once misapplied and misunderstood and have been construed as laying down the wide proposition that restrictions of the nature imposed by section 4(1)(a) of the Indian Press (Emergency Powers) Act or of similar character are outside the scope of article 19(2) of the Constitution inasmuch as they are conceived generally in the interests of public order.
Sarjoo Prosad J. also seems to have fallen into the same error.
The question that arose in Romesh Thapar 's case(1) was whether the impugned Act (Madras Maintenance Public Order Act, XXIII of 1949) in so far as it purported by section 9 (1 A) to authorise the Provincial Government "for the purpose of securing the public safety and the mainte nance of public order, to prohibit or regulate the entry.into or the circulation, sale or distribution in the Province of Madras or any part thereof any document or class of documents" was a law relating to any matter which under mined the security of or tended to overthrow the State, and it was observed that whatever ends the impugned Act may have been intended to subserve and whatever (1)[1950] section
C.R. 594.
(2) [1950] S.C.R. 605.
659 aims its framers may have had in view, its application and scope could not, in the absence of delimiting words in the statute itself, be restricted to those aggravated forms of prejudicial activity which are calculated to endanger the security of the State, nor was there any guarantee that those authorized to exercise the powers under the Act would in using them discriminate between those who act prejudical ly to the security of the State and those who do not.
Sec tion 4(1)(a) of the impugned Act, however, is restricted to aggravated forms of prejudicial activity.
It deals specifi cally with incitement to violent crimes and does not deal with acts that generally concern themselves with the mainte nance of public order.
That being so, the decision in Romesh Thalbar 's case(1) given on the constitutionality of section 9(1 A) of the Madras Maintenance of Public Order Act has no relevancy for deciding the constitutionality of the provi sions of section 4(1)(a) of the Indian Press (Emergency Powers) Act.
Towards the concluding portion in Romesh Tha par 's judgment(1) it was observed as follows : "We are therefore of opinion that unless a law restrict ing freedom of speech and expression is directed solely against the undermining of the security of the State or the overthrow of it, such law cannot fall within the reservation under clause (2) of article although the restrictions which it seeks to impose may have been conceived generally in the interests of public order.
It follows that section 9(I A) which authorizes imposition of restrictions for the wider purpose of securing public safety or the maintenance of public order falls outside the scope of authorized restric tions under clause (2), and is therefore void and unconsti tutional.
" The restrictions imposed by section 4(1)(a) of the Indian Press (Emergency Powers) Act on freedom of speech and expression are solely directed against the undermining of the security of the State or the overthrow of it and are within the ambit of article 19(2) (1) 94. 660 of the Constitution.
The deduction that a person would be free to incite to murder or other cognizable offence through the press with impunity drawn from our decision in Romesh Thapar 's case(1) could easily have been avoided as it was avoided by Shearer J. who in very emphatic terms said as follows: " I have read and re read the judgments of the Supreme Court, and I can find nothing in them myself which bear directly on the point at issue, and leads me to think that, in their opinion, a restriction of this kind is no longer permissible.
" Be that as it may, the matter is now concluded by the language of the amended article 19(2) made by the Constitu tion (First Amendment) Act which is retrospective in opera tion, and the decision of the High Court on this point cannot be sustained.
Basant Chander Ghosh contended that the amendment made in article 19 (2) of the Constitution with retrospective operation was repugnant to article 20 of the Constitution inasmuch as it declared a certain act an offence which was not an offence at the time when the act was committed.
This contention is untenable.
The respondent is alleged to have violated the provisions of section 4(1)(a) of the Indian Press (Emergency Powers) Act which was a law in force in the year 1949 when the offending pamphlet was published.
She has not been convicted of any offence so far and is not being again convicted for the same by reason of the amend ment in article 19(2).
Article 20 has no application whatev er to the present case.
Article 19(2) empowers a legislature to make laws imposing reasonable restrictions on the funda mental rights conferred under article 19(1) of the Constitu tion.
It does not declare any acts which were not offences before as offences with retrospective effect.
Moreover, in the year 1949 the respondent was not possessed of any funda mental right which could be said to have been contravened by the amendment.
Though, as I have said above, the High Court is in error in the finding that the provisions of section ,4(1)(a) (1) [1950] S.C.R. 594, 661 of the Indian Press (Emergency Powers) Act are repugnant to the Constitution, its judgment has to be maintained as it is also in error in holding that the pamphlet in question fell within the mischief of section4 (1)(a) of the Indian Press (Emergency Powers) Act.
The document is written in high flown Bengali language and contains a good deal of demagogic claptrap with some pretence to poetic flourish.
It enunciates certain abstract propositions in somewhat involved language and it cannot be followed except with considerable effort.
The High Court held that the document offended against the provisions of section 4(1)(a) inasmuch as certain parts of it contemplate a bloody and violent revolution and that the central theme that runs through the whole gamut of the offending pamphlet is that the author is anxious to bring about a bloody revo lution and change completely the present order of things by causing a total annihilation of the persons and the policies of those who according to him are in the opposite camp.
Particular reference was made to the following passages in the writing which in the opinion of the learned Judges support that conclusion.
The first of these passages is in these words : "Oh thou foolish oppressor, you want to cause abject terror in me with your red eyes and full throated voice do that, I am not afraid . .
My pro test is against parochial national politics.
"Another passage reads thus : `` Death is my secret love; poison is my drink the flames of fire are my sweet breeze; the wailing of a hundred be reaved childless mothers is just a tune in my flute; the weeping of widows at their widowhood is just a rhythm of my song.
" The next passage referred to is in these terms : "I am the cremation ground.
I am the bloodthirsty goddess Kali who lives and moves about in the cremation ground.
Plague or famine is my great joy . .
I am thirsty, I want blood, I want revolution,.
662 I want faith in the struggle.
Tear, tear the chain of wrongs; Break thou the proud head of the oppressor.
" Reference was also made to a passage in which the writer desires that his cries should be heard by people far and near, that his call should be hearkened far far away across the hills, the jungles, across the rivers and rivulets and all those who hear should come forward to join the ranks in destroying the oppressor and in which he claims that he is the messenger of death, that his revolutionary song signals the door of each of the listeners and signals to them to come out if they have life, if they have health, if they have courage to come and dash to pieces those who commit oppression on the mother, and he says that with the blood of those followers let the revolution grow.
It winds up with an invocation to the readers in these terms : "If you are true, if you are the gift of God, if you are not a bastard, then come forward with a fearless heart to struggle against the oppressors ' improper conduct, oppres sion and injustice.
We should not tolerate wrongful oppres sion.
Oh, thou the people with the burning pain of thine heart burn the heart of the oppressive, high handed oppres sor.
Let all wrongs, all high handedness, all oppressions, all tyrannies be burnt in the flame.
" It seems to me that the learned Judges of the High Court took this writing too seriously.
It did not deserve that consideration.
It is some kind of patch up work, with no consistency or cohesion between its different parts.
Por tions of it are unmeaning nonsense and in other parts it talks of revolution in the abstract.
There is no appeal to anybody in particular or for any known or specific cause.
No mention is made of any specific kind of oppression or injus tice that is intended to be remedied.
The desire is.
to change the face of the earth by ending all oppression, tyranny and injustice.
Their is no evidence whatsoever for connecting this pamphlet with any agitation or movement at the time it was written in that locality.
I have read the writing several times and I think that Mr. Ghosh is 663 right when he says that the pamphlet contains merely empty slogans, carrying no particular meaning except some amount of figurative expression or language borrowed at random from various authors with a touch of poetic flourish about it.
Writings of this characters at the present moment and in the present background of our country neither excite nor have the tendency to excite any person from among the class which is likely to read a pamphlet of this nature.
They will necessarily be educated people.
Such writings leave their readers cold and nobody takes them seriously.
People laugh and scoff at such stuff as they have become too familiar with it and such writings have lost all sting.
Any non descript person who promises to change the order of things by bloody revolution and assumes the role of a new Messiah is merely the laughing stock of his readers and creates an adverse impression against himself, rather than succeed in stirring up any excitement in the minds of the readers.
Rhetoric of this kind might in conceivable circumstances inflame passions as, for example, if addressed to an excited mob, but if such exceptional circumstances exist it was for the State Government to establish the fact.
In the absence of any such proof we must assume that the pamphlet would be read by educated persons in the quietness of their homes or in other places where the atmosphere is normal.
I would therefore hold, in the words of my brother Bose in Bhagwati Charan Shukla vs Government of C.P. & Berar(1), that though the pamphlet in question uses extravagant language and there is in it the usual crude emotional appeal which is the stock in trade of the demagogue as well as a blundering and ineffective attempt to ape the poets, that is all, and there is nothing more in it.
The time is long past when writings of this kind can in normal circumstances excite people to commit crimes of violence or murder or tend to excite any body to commit acts of violence.
Again the language employed is full of mysticism and (I) I.L.R. 664 cannot be easily understood and it creates no impression of any kind on any person.
In order to determine whether a particular document falls within the ambit section 4(1), the writing has to be considered as a whole and in a fair and free and liberal spirit, not dwelling too much upon isolated passages or upon a strong word here and there, and an endeavour should be made to gather the general effect which the whole composi tion would have on the mind of the public.
Expressions which are the stock in trade of political demagogues and have no tendency to excite anybody, and exaggerations in language cannot lead to that result.
The learned Government Advocate placed reliance on the decision of Harries C.J. in Badri Narain vs Chief Secretary, Bihar Govermnent(2).
The learned Chief Justice therein held that in order to show that cer tain words fall under section 4 (1) (a) it is not necessary to show that the words tend to incite or to encourage the commission of a particular offence or offences and that it is sufficient if they tend to incite to or to encourage the commission of cognizable offences of violence in general.
In that case, a poem entitled "Labourers, the mainstay 'of the world" began by emphasising that labourers are the mainstay of the present world and then proceeded to describe their unfortunate and pitiful lot.
In a subsequent portion the author stated that though speechless today, when organized, the labourers will be as powerful as millions and this portion of the poem ended with these words: "Why are you helplessly tolerating the exploitation of your masters." The remaining lines were as follows: "Labourers, raise now the cry of revolution.
The heavens will tremble, the Universe will shake and the flames of revolution will burst forth from land and water.
You who have been the object of exploitation, now dance the fearful dance of destruction on this earth; truly, labourers, only total destruction will (2) A.I.R. 1941 Pat.132 665 create a new world order and that will bring happiness to the whole world.
" It is quite clear that here an appeal was made to la bourers inciting and encouraging them to commit acts of violence.
The words used certainly tended to achieve that result.
They were no empty slogans or abstract propositions.
It had one consistent and coherent purpose, i.e., to excite labourers and to bring them into action.
Any observation made about this writing can have no apt application for the determination of the present case.
The learned Chief Justice in the concluding part of the judgment very pertinently pointed out that a commonsense interpretation must be given to the document complained of, the question to be answered always being, what impression will the documents or words give to a man of ordinary commonsense.
My answer to this query in the present case is that the document read at first sight is not intelligible unless it is explained to that man of ordinary commonsense by a learned person and hence it can by itself create no impression of any kind on such a person.
After the writing is explained to such a man, he will merely laugh at it and throw it in the waste paper basket without taking it seriously.
He will refuse to believe that a person of this kind can create a new world order by appealing to a bloody revolution.
As I pointed out in my judgment in Harkrishan Singh vs Emperor(1), the use of such words as appear in this document creates no impression on the mind of any reasonable reader.
That case dealt with clause (d) of section 4 (1), but the principle underlying it also applies to the construction of writings which are alleged to fall under section 4 (1) (a).
I do not mean to suggest or to lay down as a general propo sition that some of the words used in the pamphlet in ques tion in the context of any other writing would not fall within the mischief of section 4 (1) (a).
Certain parts of the pamphlet, if read as isolated passages, may have the tendency to excite people to commit (I) A,I.R, 666 crimes of violence but that is not the effect if the pam phlet is read in its entirety.
The result is that I would dismiss the appeal but in the circumstances would make no order as to costs.
The State Government has succeeded in its contention that sec tion 4 (1) (a) of the Act is constitutional and that was the real ground on which it came to this Court.
PATANJALI SASTRI C.J.
I agree with the judgment just delivered by my learned brother Mahajan J. and have nothing to add.
MUKHERJEA J. I concur in the judgment delivered by my learned brother Mahajan J. and I would like to say a few words, regarding the publication itself which led to the demand of security by the Government under the provision of the Indian Press (Emergency) Act.
The point that requires consideration is, whether the words contained in the impugned publication are of the nature described in section 4 (1) (a) of the Act; or in other words whether they incite to or encourage or tend to incite to or to encourage the commission of any offence of murder or any cognizable offence involving violence.
It is well settled that to arrive at a decision on this point, the writing is to be looked at as a whole without laying stress on isolated passages or particular expressions used here and there, and that the court should take into consideration what effect the writing is likely to produce on the minds of the readers for whom the publication is intended.
Account should also be taken of the place, circumstances and occa sion of the publication, as a clear appreciation of the background in which the words are used is of very great assistance in enabling the court to view them in their proper perspective.
The leaflet in question is entitled "Sangram" or struggle.
It is written in high flown Bengali prose with a large mixture of poetic expressions borrowed at random from the writings of some well known 667 poets of Bengal.
The object of the writing as far as could be gathered from the document is to give a poetic or ideal istic picture of what is meant and connotated by "struggle"or revolution.
The aim and end of "struggle ", as stated in the leaflet, is to wipe outs, "oppression, injus tice or wrong" which is "pervading all over the world from the past to the future"; and it is only after all wrongs, injustice and oppression have perished that a new world could be built up.
This seems to be the main or central theme of the composition, clothed, though it is, under much incoherent talk and seemingly meaningless utterances.
There is no indication throughout the writing as to what kind of oppression, injustice or wrong the author had in mind.
Far from referring to grievances of any specific character, the writer does not even hint at such general causes of discon tent as political inequality, economic exploitation or class warfare which are the subject matter of agitation in many parts of the world.
The leaflet does not give indication also of any unpopular measure or act of injustice affecting the minds of the people in the particular area where it was published and within which it was intended to be circu lated.
In one part of the document the following words are found to occur: "If mother be true, let no disgrace spread in the name of the mother.
If mother tongue be equal to mother, then the said language is your most revered goddess.
Do not allow disgrace to spread in her name".
It is not the case of the Government and there is no statement or affidavit to that effect, that the passages here have any reference to the language controversy which agitated and probably is still agitating this particular district.
In another part of the document the expression "narrow parochial politics" has been used, but here again the Government has not made any attempt to explain, what this expression could, in the particular context, mean or refer to.
As no acts of injustice or oppression are actually mentioned in the document, it is difficult to say who the "oppressors" are, whose "proud heads" the author asks his 668 readers to break.
It is quite clear that the "oppressor" mentioned here is neither the Government nor the party in power, nor has it any relation to any particular class of persons or a sect or community which might be harassing others and trampling upon their rights.
It may be, that to attract the operation of section 4 (1) (a) of the Indian Press Act, the incitement to murder or violence need not be specifically directed against particular individuals or class of persons; but when the whole talk is about injustice or oppression in the abstract, which is stated by the author to be in existence from the beginning of time and when in hyperbolic language a hope is expressed of establishing a better and a cleaner world through struggle, sweat and blood, the words used may not improperly be looked upon as an effusion of poetic fancy which, having no relation to actual facts can have very little potency for doing mis chief.
I will now proceed to examine the contents of the pamphlet in detail.
The writer begins in an affected poetic vein and de scribes, in language, to which it is difficult to attach any rational meaning, what "struggle" or revolution is.
The "struggle" which is personified in the article introduces itself in the following manner: "I am not wealth, nor popular strength, not the people nor fame;.
I am not joy nor a brag, nor the timid look of the beloved 's eyes .
I am not mother 's affection, nor sister 's love".
If these words convey any sense, they can only mean that the struggle or revolution which the writer wants to depict is something different from what we ordinarily associate with our social life and happiness; it is a negation of all natural human feelings and sentiments.
The next paragraph says in equal enigmatical language what "Sangram" or "strug gle" actually is.
"I am old antiquated history" thus the article proceeds; " I am time eternal, I am the future, the present and the past, in my heart is written the story of the past, the problems of the present and the voice of the 669 future".
I do not know whether this is a poetic way of depicting the entire life process which is said to lie through struggle and guide our evolution in this planet.
Struggle, according to the author, is coeval with time and eternity.
In the next paragraph the writer passes on to say with many repetitions of the word "wrong" that "it is wrong which is pervading all over from the past to the future", and it is this wrong that is to be righted by the struggle.
The struggle here is likened for reasons best known to the author to a piece of torn grass in the middle stream of a turbulent river, and to a grain of dust thrown in the face of a cyclone.
"It is dishonour, Unhappiness, endless pain.
" It is again likened successively to the frown of the be loved, to famine, storm and evil days.
The call is sent to everybody to come on "where the sky is cracking and the endless rough and thorny path is shrouded in darkness" and assist in building up a new world.
Many of the expressions used here are taken verbatim from the writings of some well known Bengalee authors, though they sound nothing but a rigmarole in the present context.
The next paragraph begins with the word "revolution".
Struggle is revolution and through struggle and revolution the world is to be built anew.
It is then said that "death is my darling and death is the only truth in this world".
If one has to die, there is no sense in dying of illness.
Let a man choose an honourable death by standing against oppressors.
Quite abruptly the author brings in the name of Sri Subhas Chandra Bose in the midst of this talk and asks his readers to listen "far far away across the hills, across the jungle, across the rivers and rivulets the call of Subhas Chandra Bose, the greatest revolutionary leader of the world".
The people are asked not to stop until the objective is attained.
Again it is said "I am struggle, I am revolution .
I am a Hindu, I am a Mussalman, I am a Christian, I am a Jew, I am a Keduin, I am severed from all religions by the fruits of my action in previous births".
Without the least attention to any sequence of thought, immediately 670 after this, the imaginary oppressor is addressed by the author as follows: "Oh you foolish oppressor you want to terrify with your red eyes, I fear not." The author, or rather the personified "struggle" which purports to speak, then repeats the well known words of poet Tagore and says that he does not seek salvation through renunciation; he wants that salvation which lies in joy amidst innumerable dangers and difficulties.
The idea of finding joy in all that is hated, avoided and dreaded in this world is elaborated in the passages that follow. "Death" it is said "is my secret love, poison is my drink, the flames of fire are my sweet breeze, the cry of childless mothers a tune in my flute and the weeping of widows a rythm of my song".
In this vein the author goes on conjuring up all the uncanny and weird things in the world and associat ing them with struggle.
"I am not joy, I am the remnant of the dying cries .
I am the bloodthirsty goddess Kali who lives and moves about in the cremation ground.
I want blood . .
Break the proud head of the oppressor.
I bathe in flames . . .
Thunder is my kiss of affection . .
I do not understand myself.
I do not know myself.
I do not recognise myself still I want revo lution, still I want struggle".
The learned Judges of the High Court laid very great stress on these passages which in their opinion constitute a direct incitement to bloody revolution; and that is also the line of argument adopted by Mr. Mitter who appeared before us on behalf of the State.
It has been argued by Mr. Ghosh appearing for the respondent that the "struggle" which the author has depicted and which he aims at is a non violent struggle and the blood that is to be shed is the blood of those who are called upon to resist oppression and injustice.
On the other hand, it is argued on behalf of the State that the passages quoted above can only mean that it is a bloody and violent revolution which could carry men to their desired end.
In my opinion, neither of these contentions furnish to us the proper method of approach to the question which requires 671 decision in the present case.
We would have to look at the article as a whole and focus our attention on what can be regarded to be its central theme or purpose.
As has been said already, what the writer wants is to draw an ideal picture of "struggle" or revolution quite unconnected with any particular place, or any particular political or social environment.
Injustice or oppression exists, according to the author, from the very dawn of time and so also does struggle or revolution.
It is an integral part of the world process and is a sort of irrational or blind impulse.
This is expressed by saying "I do not understand myself,I do not recognise myself, still I want revolution".
In painting death or war, the artist would naturally choose some uncanny associations.
The trappings of revolution, as the author paints it, are all the fearful and hideous things in this world.
It is linked up with thunder and storm, fire and devastation, cataclysm, famine, danger, destruction and death.
It is immaterial so far as this ideal picture is concerned whether the blood that is spoken of is the blood of the oppressor or of the oppressed, and whether the strug gle is violent or pacific.
The goddess Kali in the Hindu mythology is the goddess of destruction and death, but she is the benign goddess also whose protecting hands ward off all oppressions, danger and calamity.
That is the reason why revolution or struggle is assimilated to this goddess.
It cannot be denied that in painting this picture of "strug gle" or revolution the author has used very strong words; but they would not be unnatural if it is only an ideal picture that the author really desired to paint.
If howev er, it can be shown that under the cloud of these general enigmatical words something concrete and tangible lies hidden, that the "oppression" and "oppressor" are not imagi nary abstractions but are real things not unknown to the people to whom the article is addressed and there is in fact a grievance agitating the popular mind, no matter whether it is well or ill founded, against which the author desires to inflame public opinion;then even though he uses veiled or covert language, there 672 can be no doubt that the article would come within the purview of section 4 (1) (a) of the Indian Press Act.
But the difficulty is that the Government has not made any attempt to establish any of these facts.
Without knowing the attendant circumstances and the actual background of the publication, it is not possible for us to ascertain the real intention that lies behind the writing; and absolutely no materials have been placed before us by the Government which might enable us to find out what in reality was the sub stance behind this camouflage of words, if camouflage it actually is.
The rest of the article proceeds in the same hyperbol ic and enigmatical style There is repetition ad nauseam of the same stock phrases and expressions.
It goes on to say "I am the messenger of death.
I am untouchable, I am vague, I am queer, 1 am nightmare, I am robber, I am enemy, I am un known.
1 am not Falgoon with its sweet smelling flowers; I am eternal separation, I am restlessness".
I am extremely doubtful whether expressions like these would not, to an ordinary reader, appear to be anything better than the ravings of a mad man.
I will cull a few more expressions which occur subsequently and which loftily this impression.
"I see struggle on my darling 's face, I see struggle in the honey of flowers.
I am storm, I am the Deepak Ragini.
I am misfortune.
I am cry of distress, I am jealousy, I am evil days.
" The concluding portion of the article reads as follows: `` Let me speak the last word: If you are true, if you are gift of God, if you are not a bastard. then come forward with a fearless heart, struggle against the oppressor 's improper conduct, oppression and injustice.
We shall not tolerate wrongful oppression.
Oh, the people, with the pain of your heart burn: the heart of the oppressive high handed oppressor, let all wrongs, all high handedness, all oppres sions, all tyrannies be burnt in the flame.
" 673 There was a good deal of discussion before us as to whether these passages hint at a violent or a non. violent struggle.
It may be capable of either interpretation.
but as I have said already, that by itself would not afford a decisive solution of the question before us.
It is also not much material to consider whether the author wants that "Jealousy and malice" which he has referred to at the end of the article, are to develop and spread or they are to be transformed into innocuous and sweet smelling flowers.
This is certainly a matter upon which difference of opinion is possible.
After all, we are to see what impres sion the article read as a whole would produce upon ordinary people.
An ordinary reader is not expected to seek the assistance of an interpreter in trying to find out the true meaning of the words used.
As has been said already, many of the expressions used here have been taken verbatim from the writings of certain noted Bengalee authors.
They are stock phrases current in Bengal and amongst the Bengali speaking community elsewhere.
If it strikes the reader that what the author wanted was to pass himself off as a noted writer by sheer plagiarism, then whatever else may be said about the article, it certainly does not come within the purview of section 4 (1) (a) of the Press Act.
Taking the article as it is, it is nothing but a tissue of high sounding and meaningless words and whether the author wanted to imitate some of the welt known poets of Bengal in attempting to give a poetic description of "strug gle"or revolution or wanted to give himself the pose of a liberator of mankind, out to wipe out the last vestiges of oppression and injustice from the face of the earth, no rational person would take him seriously and would look upon this composition as the vapourings of a deranged brain.
If, on the other hand, the whole thing is a clever ruse resorted to with the object of inflaming the popular mind against certain persons or authorities, and although only general and vague words are used, the words have their meaning and significance to those 674 who are acquainted with the actual situation, it was incum bent upon the Government to clear up these matters and present before us the background and the context without which no meaning could be attributed to this species of empty verbiage.
As Government did not discharge the duty that lay upon them, I am clearly of opinion that no security order could be passed against the respondent under the provision of section 4 (1) (a) of the Press Emergency Act.
DAS J.
During the course of the arguments I enter tained some doubt as to the innocence of the meaning and implication of the pamphlet in question, but, in the light of the judgments of my learned brothers Mahajan J. and Mukherjea J., which I have had the advantage of perusing since, I do not feel that I would be justified in dissenting from the construction they have put upon the language used in the pamphlet.
I accordingly concur in their conclusion.
Bose J. I agree with my brothers Mahajan and Mukher jea.
Appeal dismissed.
| Section 4 (1) (a)of the Indian Press (Emergency Pow ers) Act (XXIII of 1931) is not unconstitutional as the restrictions imposed on freedom of speech and expression by the said section are solely directed against the undermining of the security of the State or the overthrow of it and are within the ambit of article 19(2) of the Constitution.
Romesh Thapar 's case ([1950] 655 S.C.R. 594]) and Brij Bhushan 's case ([1950] S.C.R. 605)do not lay down any wide proposition that restrictions of the nature imposed by section 4 (1) (a) are outside the scope of article 19 (2) as they are conceived generally in the interests of public order.
At any rate, the amendment made to article 19 (2) by the Constitution (First Amendment) Act which is retro spective in operation makes the matter clear.
In order to determine whether a particular document falls within the ambit of section 4(1) the writing has to be considered as a whole in a fair, free and liberal spirit, not dwelling too much on isolated passages or upon a strong word here and there, and an endeavour should be made to gather the general effect which the whole composition would have on the minds of the public.
Expressions which are the stock in trade of political demagogues and have no tenden cy to excite anybody, and exaggerations in language, cannot lead to that result.
Rhetoric of this kind might in con ceivable circumstances inflame passions, as for example, if addressed to an excited mob, but if such circumstances exist it is for the Government to establish the fact.
|
Appeal No. 55 of 1950.
Appeal by special leave from the Judgment and Order dated March 18.
1949, of the High Court of Judicature at Bombay (Chagla C. J. 178 and Ten dolkar J.) in Income tax Reference No. 5 of.
1948, arising out of order dated September 27, 1947, of the Income tax Appellate Tribunal, Bombay Bench 'A ', in I.T.A. No. 2205 of 1946 47.
C. K. Daphtary, Solicitor General for India, (K. T. Desai and A.M. Mehta, with him) for the appellant.
M. C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the respondent.
November 3.
The Judgment of the Court ,Was delivered by Bose, J. This is an appeal from the High Court at Bombay in an Income tax Reference under section 66 (1) of the Indian Income tax Act of 1922.
The reference was made to the Bombay High Court by the Bombay Bench of the Income tax Appellate Tribunal in the following circumstances.
The appellant assessee is a company known its the Raghuvanshi Mills Ltd., of Bombay.
The assessment year with which we are concerned is 1945 46. 'The assessee had insured its buildings, plant and machinery with various insurance companies and also took out, besides those policies, four policies of a type known as a "Consequential Loss Policy.
" This kind of policy insures against loss of profit, standing charges and agency commission.
The total insured against under, the latter heads was Rs. 37,75,000 account of loss.of profits and standing charges, and Rs. 2,26,000 account of agency commission, making a total of Rs. 40,00,000.
On the 18th of January, 1944, a fire.
broke out and the mill were completely destroyed.
The various insurance companies therefore paid the assessee company an aggregate of Rs. 14,00,000 account in the year with which we are concerned under these policies.
This was paid in two sums as follows: Rs. 8,25,0.00 8th September, 1944, and Rs. 5,75,000 22nd December, 1944.
These payments have been treated as part of the assessee 's 'income and the 179 company has been taxed accordingly.
The question is whether these sums are or are not liable to tax.
Before we set out the question referred, it will be necessary to state that the whole of this Rs. 14,00, 000 has been treated as paid account of loss of profits.
The learned Solicitor General, who appeared for the ) appellant assessee, contended that that was wrong because the portion of it assignable to standing charges and agency commission could not any construction be liable to tax.
This contention is new and involves questions of fact and travels beyond the scope ' of the question referred.
We are consequently not, able to entertain it.
It has been assumed throughout the proceedings, tight up to this Court, that the whole of the Rs. 14,00,000 was assignable to loss of profits.
There is nothing the record to show that it was ever split up among the other heads or that it was ever treated &a having been split up,either by the insurance com panies or by the assessee, nor is there any material which we would be able to apportion it.
Our decision therefore proceeds the assumption that the whole sum is assignable to loss of profits and we make it clear that we 'decide nothing about other moneys which may be distributable among other heads.
The question has been referred in these terms: "Whether in the circumstances of the case, the sum of Rs. 14,00,000 was the assessee company 's income within the meaning of Section 2(6C) of the Indian Income tax Act and liable to pay income tax under the Indian Income tax Act.
" We are concerned in this case with four policies of insurance with four different insurance companies.
The clauses relevant to the present matter are the same in all four cases though the sum insured against by.
each insurance company differs.
They are as follows "POLICY NO.
C.L. 110018. . . 180 Rupees X Lacs only Loss of Profits, Standing Charges and Agency Commission of the above Co. 's Mills, situate at Haines o Road, Mahaluxmi; Bombay, following . .
The total amount declared for insurance is Rs. 40,00,000 and for 18 months ' benefits only as under: Rs. 37,75,000 Loss of Profits and Standing Charges.
Rs. 2,25,000 Agency Commission.
Rs. 40,00,000 Out, of which this policy covers Rs. X lacs only.
Schedule attached to and forming part of Po licy No. C. L. 10018.
The company will pay to the assured: The loss of Gross Profit due to (a) Reduction in Output and (b@) increase in Cost of Working and the, amount payable as indemnity hereunder shall. .
Definitions of those two terms follow.
We need not reproduce talent.
Then come the following definitions: "Gross profit.
The sum produced by adding to the Net Profit the amount of the Insured Standing Charges, or if there be no Net Profit the amount of the Insured Standing Charges, less such a proportion of any net trading loss as the amount of the Insured Standing Charges bears to all the Standing Charges of the business.
Net profit.
The net trading profit (exclusive of all capital receipts and accretions and all outlay properly chargeable to capital) resulting from the business of the Insured at the premises after due provision has been made for all Standing 'and other charges including depreciation.
Insured standing charges.
Interest Loans and Bank Overdrafts, Rent Rates and Taxes, Salaries to Permanent Staff and Wages to Skilled Employees, 181 Directors ' Fees, Auditor 's Fees, Travelling Expenses, Insurance Premiums, Advertising and Agency Commission.
Period of indemnity.
The period beginning with the occurrence of the fire and ending not later than eighteen consecutive calendar months thereafter during which the results of the business shall be affected in consequence of the fire.
Rate of Gross Profit.
The rate of gross profit per unit earned the output during the financial year immediately before the date of the fire. . to which such adjustments shall be made as may be necessary to provide for the trend of the business and for variations in or special circumstances affecting the business either before or after the fire or which would have affected the business had the fire not occurred so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the result which, but for the fire, would have been obtained during the relative period after the fire. " The underlined words show that the insurance in respect of profits was to represent as 'nearly as possible the profits which would have been made, had the mills been working in its normal way.
We turn next to the Income tax Act.
Under section 3 the "total income of the previous year" is liable to tax subject to the provisions of the Act.
Section 4 defines the total income to include "all income, profits and gains from whatever source derived.
" There are certain qualifications but they do not concern us here.
It will be seen that the taxable commodity, "total income", embraces three elements, "income", "profits" and "gains".
Now though these may overlap in many cases, they are nevertheless separate and severable, and the simple question is whether the Rs. 14 lacs Here italicised.
24 182 fall under any one or more of those heads.
In our opinion, it is "income" and so is taxable.
It was argued behalf of the assessee that it can not be called profits because the money is only pay able if and when there is a loss or partial loss and that something received from an outside source in circumstances like these is not money which is earned in the business and if there are no earnings and no profits there cannot be any income.
But that only concentrates the word " ' profits".
This may not be a "profit" but it is something which represents the profits and was intended to take the place of them and is therefore just as much income as profits or gains received in the ordinary way.
Section 4 is so widely worded that everything which is received by a man and goes to swell the credit side of his total account is either an income or a profit or a gain.
No attempt has been made in the Act to define "income" except to say in section 2 (6C) that it includes certain things which would possibly not have been regarded as income but for the special definition.
That however does not limit the generality of its natural meaning except as qualifided in the section itself.
The words which follow, namely, "from a whatever source derived", show how wide the net is spread.
So also in section 6.
After setting out the various heads of taxable income it brings in the all embracing phrase "income from other sources.
" There is however a distinction between "income" and "taxable income".
The Act does not purport to subject all sources of income to tax, for the liability is expressly made subject to the provisions of the Act and among the provisions are a series of exceptions and limitations.
Most of them are set out in section 4 itself but none of them apply here.
The nearest approach for present purposes is section 4 (3) (vii): "Any receipts. . not being receipts arising from business. . which are of a casual and non recurring nature.
" 183 But the sting, so far as the assessee is concerned, lies in the words "not being receipts arising from business.
" The assessee is a business company.
Its aim is to make profits and to insure against loss.
In the ordinary way it does this by buying raw material, manufacturing goods out of them and selling them so that balance there is a profit or gain to itself.
But it also has other ways of acquiring gain, as do all prudent businesses, namely by insuring against loss of profits.
It is indubitable that the money paid in such circumstances is a receipt and in so far as it represents loss of profits, as opposed to loss of capital and so forth, it is an item of income in any normal sense of the term.
It is equally clear that the receipt is in separably connected with the ownership and conduct of the business and arises.
from it.
Accordingly, it is not exempt.
This question was considered by the Supreme Court of Canada which decided that a receipt of this nature is not a "profit" and so is not taxable [B. C. Fir and Cedar Lumber Co. vs The King(1)].
But the Court did not examine the wider position whether it is "income" and in any event the decision was reversed appeal to the Privy Council(1).
Their Lordships held it is "income".
This was followed later by the Court of Appeal in England and endorsed by the House of Lords in Commissioners of inland Revenue vs William 's Executors(1) In so far as these decisions do not turn the special wording of the Acts with which they are respectively concerned and deal with the more general meaning of the word "income", we prefer the view taken in England.
It is true the Judicial Committee attempted a narrower definition in Commissioner of income tax vs Shaw Wallace & Co.(1), by limiting income to "a periodical monetary return 'coming in ' with some sort of regularity, or expected regularity, from definite sources" but, in our opinion, those remarks must be (I) [1931] Canada L.R. 435.
(2) [I932] A. C. 441 at 448.
(3) (I944) (4) (1932) 59 I.A. 206.
184 read with reference to the particular facts of that case.
The non recurring aspect of this kind of receipt was considered by the Privy Council in The King vs B. C. Fir and Cedar Lumber Co.(1), and we do not think $their Lordships had in mind a case of this nature when they decided Shaw Wallace & Company 's case (2).
The learned Solicitor General relies strongly a clause which appears in three of the four policies with which we are concerned.
That is a clause which states that the insured must do all he can to minimise the loss in profits and until he makes an endeavour to re start the business the moneys will not be paid.
This, he argued, shows that the money was paid as an indemnity against the loss of profits and was niether income nor profits, nor was it a gain within the meaning of the section.
We are unable to see how these receipts cease to be income simply because certain things must be done before the moneys can be claimed.
In our opinion, the High Court was right in holding that the Rs. 14,00,000 is assessable to tax.
The appeal fails and is dismissed with costs.
Appeal dismissed.
(1) [1032] A.C. 441, at 448.
(2) [1932] 59 I.A. 206.
| The appellant mills had insured its building, plant and machinery with various insurance conapanies against fire and had also taken out some policies of the type known.
as " consequential loss policies " which insured against loss of profits, standing charges and agency commission.
The mills were completely destroyed by fire and the appellant received certain sums of money under the consequential loss policies.
Held, that sums of money received under these policies were "income" within the meaning of section 2 (60) of the Indian Income tax Act, and as they were inseparably connected with the ownership and conduct of the business of the company and arose I from it, they were not exempt under section 4 (3) (vii), and were therefore assessable to income tax under the Indian Income tax Act.
[Their Lordships, made it clear that they proceeded the assumption that the whole sum was assignable to loss of profits and that they decided nothing about other moneys which may be distributable amongst other beads, e.g., standing charges or agency commission.] The definition of "income" in Shaw Wallace & Co. 's case [(1932) 59 I.A. 206] as a "periodical monetary return 'coming in ' with some sort of regularity, or expected regularity, from definite sources " must be read with reference to the particular facts of that case and is not applicable to receipts, of this nature.
The King vs B.C., Fir and Cedar Lumber Co. and Commissioners Of Inland Revenue vs Wi WiIliams 's Executors applied.
Commissioner of Income tax, Bengal vs Shaw Wallace & Co. (1932) 59 I.A. 206, commented upon.
Judgment o f the Bombay High Court affirmed.
|
Appeals Nos. 12 and 13 of 1951.
Appeals from the Judgment and Decree dated the 17th/21st February, 1947, of the High Court of Judicature at Calcutta (Mukherjea and Biswas JJ.) in Appeal from Original Order No. 62 of 1946 with cross objectiou and Civil Revision Case No. 657 of 1946 arising out of Judgment and Order dated the 13th March, 1946, of the Court of the Subordinate Judge, Howrah, in Title Execution Case No. 68 of 1936.
M. C. Setalvad (Attorney General for India) and Purushottam Chatterjee (section N. Mukherjee, with them) for the appellant in Civil Appeal No. 12 of 1951 and respondent in Civil Appeal No. 13 of 1951.
C. K. Daphtary (Solicitor General for India) and N. C. Chatterjee (C. N. Laik and A. C. Mukherjea, with them) for the respondents in Civil Appeal No. 12 of 1951 and appellants in Civil Appeal No. 13 of 1951.
October 30.
The judgment of the Court was delivered by MAHAJAN J.
These are two cross appeals from the decision of the High Court at Calcutta in its appellate jurisdiction dated 17th February, 1947, modifying the order of the Subordinate Judge of Howrah in Title Execution Case No. 68 of 1936.
The litigation culminating in these appeals comnmenced about thirty years ago.
In the year 1923, one Durga Prasad Chamria instituted a suit against the respondents, Radha Kissen Chamria, Motilal Chamria and their mother Anardevi Sethan (since deceased) for specific performance of an agreement, 139 for sale of an immoveable property in Howrah claiming a sum of Rs. 11,03,063 8 3 and other reliefs.
The suit, was eventually decreed compromise the 19th April, 1926.
Under the compromise decree the plaintiff became entitled to a sum of Rs. 8,61,000 from the respondents with interest at 61 per cent.
with yearly rests from the date fixed for payment till realization.
Part of the decretal sum was payable the execution of the solenama and the rest by instalments within eighteen months of that date.
Within fifteen months from the date of the decree a sum of Rs. 10,00,987 15 6 is said to have been paid towards satisfaction of it.
No steps were taken either by the judgment debtors or the decre holder regarding certification of most of those payments within the time prescribed by law.
The judgment debtors after the expiry of a long time made an application for certification but the decree holder vehemently resisted it and declined to 'admit the payments.
The result was that the court only recorded the payment of the last three instalments which had been made within ninety days before the application and the judgmentdebtors had to commence a regular suit against the decree holder for recovery of the amounts paid, and not admitted in the execution proceedings.
In the year 1929 a decree was passed in favour of the judgment debtors for the amount paid by them and not ,certified in the execution.
In the meantime the decree holder had realized further amounts in execution of the decree by taking out execution proceedings two or three occasions.
The amount for which a decree had been passed against the decree holder was also thereafter adjusted towards the amount duo under ' the consent decree.
On the 17th March, 1933, the decree was assigned by Durga Prasad to the appellant Keshardeo Chamria.
The execution proceedings out of which these appeals arise were started by the assignee the 10th October, 1936, for the realization of Rs. 4,20,693 8 9 and interest and costs.
This execution had a chequered career.
To begin with, the judgment debtors raised 140 an objection that the assignee being a mere benamidar of Durga Prasad Chamria had no locus standi to take out execution.
This dispute eventually ended in favour of the assignee after about five years ' fight and it was held that the assignment was bonafide and Keshardeo was not a benamidar of the decree holder.
On the 17th July, 1942, Keshardeo made an application for attachment of various new properties of the judgment debtors and for their arrest.
Another set of objections was filed against this application by Radha Kissen Chamria.
He disputed the correctness of the decretal amount, and contended that a certain payment of Rs. 1,60,000 should be recorded and certified as made the 28th May, 1934, and not the date the sum was actually paid to the decreeholer.
This objection was decided by the Subordinate Judge the 11th September, 1942, and it was held that the judgment debtors were liable to pay interest the sum of Rs. 1,60,000 up to the 12th October, 1936, and not up to the 4th July, 1941, 'as claimed by the assignee.
appeal the High Court by its judgment dated the 22nd June, 1943, upheld the decree holder 's contention, and ruled that the judgment debtors were liable to pay interest up to the 4th July, 1941, this sum of Rs. 1,60,000.
The judgment debtors then applied for leave to appeal to the Privy Council against this decision and leave was granted.
the 13th February, 1945, an application wag made to withdraw the appeals, and with ' drawal was allowed by an order of the court dated the 20th February, 1945.
Thus the resistance offered by the judgment debtors to the decree holder 's application of the 17th July, 1942, ended the 20th February, 1945.
The records of the execution case were then sent back by the High Court and reached the Howrah Court the 28th February, 1945.
The decreeholder 's counsel was informed of the arrival of the records by an order dated the 2nd March, 1945.
The hearing of the case was fixed for the 5th March 1945.
the 5th March, 1945 the court made the following order; 141 Decree holder prays for time to take necessary steps.
The case is adjourned to 10th March, 1945, for order.
Decree holder to take necessary steps by, that date positively.
" The decree holder applied for further adjournment, of the case and the 10th the court passed an order in these terms: "Decree holder prays for time ' again to give necessary instructions to his pleader for taking necessary steps.
The 'petition for time is rejected.
The execution case is dismissed part satisfaction.
" When the decree holder was apprised of this order, he, the 19th March, 1945, made an application under section 151, Civil Procedure Code, for restoration of the execution and for getting aside the order of dismissal.
this application notice was issued to the judgment debtors who raised a number of objections against the decree holder 's petition to revive the execution.
By an order dated the 25th April, 1945, the Subordinate Judge granted the decree holder 's prayer and ordered restoration of the execution.
The operative part of the order is in these terms: " 10th March, 1945, the decree holder again prayed for time for the purpose of giving necessary instructions to his pleader for taking steps.
That petition was rejected by me.
10th March,, 1945, by the same order I mean the order rejecting the petition for adjournment I dismissed the 'execution case part satisfaction.
The learned counsel behalf of the present petitioner wants me to vacate the order by which I have dismissed the execution case part satisfaction.
He has invoked the aid of section 151, Civil Procedure Code,: for cancellation of this order and the consequent restoration of the execution case.
I would discuss at the very outset as to whether I was justified in dismissing the,execution case in the same order,after rejecting the petition of the decree holder for an 142 adjournment without giving him an opportunity to his pleader to make any submission he might have to make after the rejection of the petition for time.
It is clear from the order that the fact that the petition for time 'filed by the decree holder 10th March, 1945, was rejected by me was not brought to the notice of the pleader for the decree holder.
It seems to me that there was denial of justice to the decree holder in the present execution proceeding inasmuch as it was a sad omission my part not to communicate to his pleader the result of this petition he made praying for an adjournment of this execution proceeding and at the same time, to dismiss the execution case part satisfaction which has brought about consequences highly prejudicial to the interest of the decree holder.
I think section 151, Civil Procedure Code, is the only section which.
empowers me to rectify the said omission I have made in not com municating to the pleader for the decree holder as to the fate of his application for an adjournment of the execution case and as such I would vacate the order passed by me dismissing the execution case part satisfaction.
The ends of justice for which the court exists demand such rectification and I would do it.
The learned Advocate General behalf of the judgment debtor Radha Kissen has argued before me that this court has no jurisdiction to vacate the order passed by me 10th March, 1945, dismissing the execution case part satisfaction.
His argument is that section 48, Civil Procedure Code, stands in my way inasmuch as the law of limitation as provided in the above section debars the relief as sought for by the decree holder in the present application.
I do not question the soundness of this argument advanced by the learned Advocate General.
The facts of this case bring home the fact that in the present case I am rectifying a sad omission made by me which brought about practically a denial of justice to the decree holder and as such the operation of section 48, Civil Procedure Code, does not come to the assistance of the judgment debtor Radha Kissen," 143 It would have saved considerable expense and trouble to the parties had the dismissal for default chapter been closed for ever by this order of the Judge; the proceedings, however, took a different course.
A serious controversy raged between the parties about the correctness of this obviously just order and after seven years it is now before us.
An appeal and a revision were preferred to the High Court against this order.
By its judgment dated 24th August, 1945, the High Court held that no appeal lay against it as the question involved did not fall within the ambit of section 47, Civil Procedure Code.
It, however, entertained the revision application and allowed it, and remanded the case to the Subordinate Judge for reconsideration and disposal in accordance with the observations made in the order.
The High Court took the view that the Subordinate Judge was in error in restoring the execution without taking into consideration the point whether the decree holder 's pleader could really take any step in aid of the execution if he had been apprised of the order of the court dismissing the adjournment application.
This is what the High Court said: "The ground put forward by the Subordinate Judge in support of his order for restoration is that the order rejecting the adjournment petition should have been communicated to the pleader for the decree holder but this was not done.
We will assume that this was an omission the part of the court.
The question now is whether it was possible for the decree holder to take any further steps in connection with the execution of the decree and thereby prevent the execution case from being dismissed for default.
No evidence was taken by the learned Subordienate Judge this point and even the pleader who was in charge of the execution case behalf of the decree holder was not examined. .
If really the decree holder was not in a position to state that day as to what was the amount due under the decree for which he wanted the execution to be levied and if according to him it required elaborate accounting for the purpose 144 of arriving at the proper figure, it was not possible for him to ask the court to issue any process by way of attachment of the property that date.
It seems to us that the learned Judge should have considered this matter properly and he should have found proper material as to whether the decree holder could really take any steps after the application for adjournment was disallowed." In sharp contrast to the opinion contained in the order of remand is the view now expressed by the High Court this point in its final judgment under appeal "One important circumstance which, in our opinion ; tells 'in favour of the decreeholder is the fact we have noticed before, namely, that after the ' petition for time was rejected the court did not call the execution case and otherwise intimate its decision to go with it.
In one sense this,might be regarded as a mere error of procedure the part of the court which it would be wrong to allow the decreeholder to take advantage of, but an, error it was, as was admitted by the learned judge himself who had dealt with the matter, and we do not think his opinion, can be lightly brushed aside.
There can be no doubt that the learned judge was in the best position to speak as regards the actual proceedings in his court % the 10th March, 1945, and if he thought that it amounted to a 'denial of justice ' to have rejected the petition for time and by the same order to dismiss the ,execution case, it is not for us to say that he was not right.
It may well be that even if the case was called the decree holder 's pleader would even then have been absent, but having regard to all the facts and circumstances of the case, we think the court might yet give the decree holder the benefit of doubtin this matter, and assume in his favour that his pleader would have appeared before the learned, judge and tried to avert a peremptory dismissal of the execution case, even though he or his client might not have been fully ready with all necessary materials for continuing the execution proceeding.
145 As we have pointed out before and as the court below has also found, it was possible,for the decreeholder or his pleader to have submitted to the court, some sort,of an account of the decretal dues that date after refusal of the adjournment but even if this could not be done, we still believe that the pleader, if he appeared, could have done something, either by drawing the court 's attention to some of its previous orders or otherwise, by which a dismissal of the case might be prevented.
" It was not difficult to envisage what the counsel would have done when faced with such a dilemma.
He, would.
have straightaway stated that the execution should issue, for an amount,which was roughly known to ' him, and that the court should,issue a process, for the arrest of the judgment debtors.
BY such a statement he would have saved the dismissal without any,detriment to his client: who could later make another application stating the precise amount due and praying for additional reliefs.
After remand the 13th March, 1946, the learned Subordinate Judge restored the execution case in respect of a sum of Rs.92,OOO only and maintained the order of dismissal in other respects.
He held that the decree holder was grossly negligent on the 5th and the 10th March, 1945, and that due to his negligence the execution case was dismissed in default that even if his pleader had been informed of the order rejecting the application for adjournment he could not have taken any steps to prevent the dismissal of the execu tion; that the execution being now barred by limitation the judgment debtors should not be deprived of the valuable rights acquired by them but at the same time they should not be allowed to retain the advantage of an acknowledgment of a debt of Rs, 92,000 made by the decree holder.
Both the decree holder and the judgment debtors were dissatisfied with this order.
The decree holder preferred an appeal to the High Court and also filed an application under section 115, Civil Procedure 146 Code.
The judgment debtors filed cross objections in the appeal and also preferred an alternative application in revision.
The appeal, the cross objections and the two revision 'applications were disposed of together by the High Court by its judgment dated 17th February, 1947.
The order dismissing the execution in default was set aside and the case was restored terms.
The decreeholder was held disentitled to interest the decretal amount from 10th March, 1945, to the date of final ascertainment of the amount of such interest by the executing court and was ordered to pay to the judgment debtors a consolidated sum of Rs. 20,000 by way of compensatory costs.
He was to pay this amount to the judgment debtora within two weeks of the arrival of the records in the executing court or have it certified in the execution.
In default the appeal was to stand dismissed with costs and the cross objections decreed with costs.
An application for leave to appeal to His Majesty in Council against this order was made by the judgment debtors and leave was granted to them 30th May, 1947.
The decree holder also applied for leave and he was granted leave 27th June, 1946.
Both the appeals were consolidated by an order of the court dated 4th December, 1947, and thereafter the appeals were transferred to this court.
On behalf of the decree holder it was contended that the High Court was wrong in allowing the judgment debtors Rs. 20,000 by way of compensation for costs, and that having regard to the terms of the compromise decree it had no jurisdiction to deprive the decree holder of the interest allowed to him by the decree, and that it had neither power nor jurisdiction under section 115, Civil Procedure Code, to set aside the order dated 25th April, 1945, passed by Mr. Chakravarti, Subordinate Judge, under section 151 of the said Code and that the interlocutory remand order of the High Court being without jurisdiction.
, all subsequent proceedings taken thereafter were null and void.
147 The earned counsel for the judgment debtors not only supported the judgment of the High Court to the extent it went in their favour but contended that the High Court should have refused to restore the execution altogether and that the assumption made by it that the decree holder 's pleader could do something to prevent the dismissal of the case or could present some sort of statement to the court was wholly unwarranted and unjustifiable.
It was urged that it ought to have been held that the decree holder was guilty of gross negligence and he was himself responsible for the dismissal of the case, and that it was not necessary to formally call the case after the rejection of the petition for adjournment and that a valuable right having accrued to the judgment debtors by efflux of time, they should not have been deprived of it in the exercise of the inherent powers of the court.
It is unnecessary to consider all the points taken in these appeals because, in our opinions the point canvassed behalf of the decree holder that the order of remand was without jurisdiction and that all the proceedings taken subsequent to the order of the executing court reviving the execution were void, has force.
The sole ground which the Subordinate Judge had ordered restoration of the execution was that he had himself made a sad mistake in dismissing it at the same time that he dismissed the adjournment application without informing the decree holder 's counsel that the request for adjournment had been refused and without calling upon him to state what he wanted done in the matter in those circumstances.
As the Subordinate Judge was correcting his own error in the exercise of his inherent powers, it was not necessary for him to investigate into the correctness of the various allegations and counter allegations made by the parties.
He was the best judge of the procedure that was usually adopted in his court in such cases and there is no reason whatsoever for the supposition that when the Subordinate Judge said that he had not given any opportunity to 148 the decree holder 's pleader to take any steps in execution of the decree after the dismissal of the adjournment application he was not right.
It could not be seriously suggested that such an opportunity was given to the decree holder, the dismissal order of the execution having been made at the same moment of time as the order dismissing the application for adjournment It is quite clear that the interest of justice demanded that the decree holder 's pleader should have been informed that his request for adjournment had been refused, and further given opportunity to state what he wanted done in that situation.
It was wholly unnecessary in such circumstances to speculate what the pleader would have done when faced with that situation.
I The solid fact remains that he was not given that opportunity and that being so, the order dismissing the execution was bad and was rightly corrected by the court its own initiative in the exercise of its inherent powers.
The point for determination then is whether such an order could be set aside by the High Court either in the exercise of its appellate or revisional powers.
It is plain that the High Court bad no jurisdiction in the exercise of its appellate jurisdiction to reverse this decision.
In the remand order itself it was held that it was difficult to say that the order by itself amounted to a final determination of any question relating to execution, discharge or satisfaction of a decree and that being so, it did not fall within the ambit of section 47 Civil Procedure Code.
We are in entire agreement with this observation.
The proceedings that commenced with the decree holder 's application for restoration of the execution and terminated with the order of revival can in no sense be said to relate to the determination of any question concerning the ,execution, discharge or satisfaction of the decree.
Such proceedings are in their nature collateral to the execution and are independent of it.
It was not contended and could not he seriously urged that an order under section 151 simpliciter is 149 appealable.
Under the Code of Civil Procedure certain specific orders mentioned in section 104 and Order XLIII, rule 1, only are appealable and no appeal lies from any other orders.
(Vide section 105, Civil Procedure Code).
An order made under action 151 is not included in the category of appealable orders.
In support of his contention that an order made under section 151 may in certain circumstances be appealable, Mr. Daphtary placed reliance two single Judge judgments of the Madras High Court and a Bench decision of Oudh.
[Vide Akshia Pillai vs Govindarajulu Chetty(1); Govinda Padayachi vs Velu Murugiah Chettiar(2); Noor Mohammad vs Sulaiman Khan(1)].
In all these cases execution sale had been set aside by the court in exercise of inherent powers and it was held that such orders were appealable.
The ratio of the decision in the first Madras case is by no means very clear and the reasoning is somewhat dubious.
In the other two cases the orders were held appealable the ground that they fell within the ambit of section 47, Civil Procedure Code, read with section 151.
It is unnecessary to examine the correctness of these decisions as they have no bearing the point before us, ' there being no analogy between an order setting aside an execution sale and an order setting aside the dismissal of an application.
The High Court was thus right in upholding the preliminary objection that no appeal lay from the order of the Subordinate Judge dated 25th April, 1945.
We now proceed to consider whether a revision was competent against the order of the 25th April, 1945, when no appeal lay.
It seems to us that in this matter really the High Court entertained an appeal in ' the guise of a revision.
The revisional ' jurisdiction of the High Court is set out in the 115th section of the Code of Civil Procedure in these terms: (I) A.I.R. 31924 Mad. 778.
(3) A.I.R. 1943 Oudh 35.
(2) A.I.R. 1933 Mad.
399 20 150 "The High Court may call for the record of any case which has been decided by any court subordinate to such High Court and in which appeallies thereto, and if such subordinate court appears: (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or (e) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make 'such order in the case as it thinks fit.,, A large number of cases have been collected in the fourth edition of Chitaley & Rao 's Code of Civil Procedure (Vol.
I), which only serve to show that the High Courts have not always appreciated the limits of the jurisdiction conferred by this section.
In Mohunt Bhagwan Ramanuj Das vs Khetter Moni Dassi(1), the High Court of Calcutta expressed the opinion that sub clause (c.) of section 115, Civil Pro cedure Code, was intended to authorize the High Courts to interfere.
and correct gross and palpable errors of subordinate courts, so as to prevent grave injustice in non appealable cases.
This decision was, however, dissented from by the same High Court in Enat Mondul vs Baloram Dey(2), but was cited with approval by Lort Williams J., in Gulabohand Bangur vs Kabiruddin Ahmed(1).
In these circumstances it is worthwhile recalling again to mind the decisions ,of the Privy Council this subject and the limits stated therein for the exercise of jurisdiction conferred by this section the High Courts.
As long ago as 1894, in Hajah Amir Has8an Khan 'vs Sheo Baksh Singh(1), the Privy Council made the following observations section 622 of the former Code of Civil Procedure, which was replaced by section 115 of the Code of 1908: "The question then is, did the Judges of the lower courts in this case, in the exercise of their (I) (1897) I C.W.N. 617.
(3) Cal.
(a) (4) (1883 84) L.R. xi I.A. 237.
151 jurisdiction, act illegally or with material irregularity.
It appears that they had perfect jurisdiction to decide the case, and even if they decided wrongly, they did not exercise their jurisdiction illegally or with material irregularity." In 1917 again in Balakrishna Udayar vs Vasudeva Aiyar(1), the Board observed: "It will be observed that the section applies to jurisdiction alone, the irregular exercise or nonexercise of it, or the illegal assumption of it.
The section is not directed against conclusions of law or fact in which the question of jurisdiction is not involved.
" In 1949 in Venkatagiri Ayyangar vs Hindu Religious Endowments Board, Madras(1), the Privy Council again examined the scope of section 115 and observed that they could see no justification for the view that the section was intended to authorize the High Court to interfere and correct gross and palpable errors of subordinate courts so as to prevent grave injustice in non appealable cases and that it would be difficult to formulate any standard by which the degree of err or of subordinate courts could be measured.
It was said " Section 115 applies only to cases in which no appeal lies, and, where the legislature has provided no right of appeal, the manifest intention is that the order of the trial Court, right or wrong, shall be final.
The section empowers the High Court to satisfy itself three matters, (a) that the order of the subordinate court is within its jurisdiction ; (b) that the case is one in which the court ought to exercise jurisdiction; and (c) that in exercising jurisdiction the court has not acted illegally, that is, in breach of some provision of law, or with material irregularity, that is, by committing some error of procedure in the course of the trial which is material in that it may have affected the ultimate decision.
If the High Court is satisfied those three matters,, it has no (1) (1917) L.R. 44 I,A. 26i.
(2) (1949) L.R. 76 I.A. 67.
power to interfere because it differs, however profoundly, from the conclusions of the subordinate court questions of fact or law.
" Later in the same year in Joy Chand Lal Babu vs Kamalaksha Choudhury(1), their Lordships had again adverted to this matter and reiterated what they had said in their earlier decision.
They pointed out "There have been a very large number of decisions of Indian High Courts section 115 to many of which their Lordships have been referred.
Some of such decisions prompt the observation that High Courts have not always appreciated that although error in a decision of a subordinate court does not by itself involve that the subordinate court has acted illegally or with material irregularity so as to justify interference in revision under sub section (c), nevertheless, if the erroneous decision results in the sub ordinate court exercising a jurisdiction not vested in it by law, or failing to exercise a jurisdiction so, vested, a case for revision arises under subsection (a) or subsection (b) and sub section (c) can be ignored.
" Reference may also be made to the observations of Bose J. in his order of reference in Narayan Sonaji vs Sheshrao Vithoba(2) wherein it was said that the words "illegally" and "material irregularity" do not cover either errors of fact or law.
They do not refer to the decision arrived at but to the manner in which it is reached.
The errors contemplated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with.
We are therefore of the opinion that in reversing the order of the executing court dated the 25th April, 1945, reviving the execution, the High Court exercised jurisdiction not conferred it by section 116 of the Code.
It is plain that the order of the Subordinate Judge dated the 25th April, .
1945, was one that he had jurisdiction to make, that in making that order he neither acted in excess, of his jurisdiction (I) (I949) T .R .
76 J. A. 131.
(2) A.I.R. 1948 Nag.
153 nor did he assume jurisdiction which he did not possess.
It could not be said that in the exercise of it he acted with material irregularity or committed any breach of the procedure laid down for reaching the result.
All that happened was that he felt that be had committed an error, in dismissing the main execution while he was merely dealing with an adjournment application.
It cannot be said that his omission in not taking into consideration what the decree holder 's pleader would have done had he been given the opportunity to make his submission amounts to material irregularity in the exercise of jurisdiction.
This speculation was hardly relevant in the view of the case that he took.
The Judge had jurisdiction to correct his own error without entering into 'a discussion of the grounds taken by the decree holder or the objections raised by the judgment debtors.
We are satisfied therefore that the High Court acted in excess of its jurisdiction when it entertained an application in revision against the order of the Subordinate Judge dated the 25th April, 1945, and set it aside in exercise of that jurisdiction and remanded the case for further enquiry.
The result therefore is that Appeal No. 12 of 1951 is allowed, as the interlocutory remand order of the High Court was one without jurisdiction and that being so, the subsequent proceedings taken in consequence of it, viz., the order of the Subordinate Judge restoring the application for execution to the extent of Rs. 92,000, and the further order of the High Court appeal restoring the execution case terms, are null and void and have to be set aside and the order of the executing court dated the 25th April, 1945, restored.
We order accordingly.
Appeal No. 13 of 1951 is dismissed.
In the peculiar circumstances of this case we direct that the parties be left to bear their own costs throughout, that is, those incurred by them in the High Court in the proceedings which terminated with the remand order, the costs incurred in the subordinate court after the remand order, and the costs there after 154 incurred in the High Court and those incurred in this court i n these appeals.
Appeal No. 12 allowed.
Appeal No. 13 dismissed.
I Agent for the appellant in C. A. No. 12 and respondent in C.A. No. 12: P. K. Chatterjee.
Agent for the respondents in C. A. No. 12 and appellants in C. A. No. 13: Sukumar Ghose.
| A Subordinate Judge dismissed an application by a decree holder for adjournment of an execution case and by the same order dismissed the execution case itself without informing the decree.
holder 's pleader that the application for adjournment had been dismissed and asking him whether be had to make any submission in 137 the matter of the execution case, and an application for restoration of the execution case setting aside the order of dismissal, the Subordinate Judge, finding that he had committed an error which had resulted in denial of justice restored the execution case in the exercise of the inherent powers of the court under section 151, Civil Procedure Code.
The judgment debtor preferred an appeal and an application, for revision to the High Court against this order.
The High Court held that the appeal was not maintainable but set aside the order of the Subordinate Judge in the exercise of its revisional powers and remanded the case to the Subordinate Judge for fresh disposal after considering whether it would have been possible for the decree holder to take any further steps in connection with the execution application after the dismissal of the application for adjournment: Held, (i) that the order of the Subordinate Judge dismissing the execution case without giving an opportunity to the decree holder 's pleader to state what he had to say the case itself was bad and was rightly set aside by the court its own initiative in exercise of its inherent powers.
(ii)The High Court had no jurisdiction in the exercise of its appellate powers to reverse the order of restoration as that order by itself did not amount to a final determination of any question relating to execution, discharge or satisfaction of a decree within the meaning of section 47, Criminal Procedure Code, and an order made under section 151, Criminal Procedure Code, simpliciter is not an appealable order.
Akshia Pillai vs Govindarajulu Chetty (A.I.R. 1924 Mad.
778), Govinda Padayachi vs Velu Murugiah Chettiar (A.I.R. and Noor Mohammad vs Sulaiman Khan (A.I.R. 1943 Oudh 35) distinguished.
(iii)As the order of the Subordinate Judge was one that he had jurisdiction to make, and as he had, in making that order, neither acted in excess of his jurisdiction or with material irregularity nor committed any breach of procedure, the High Court acted in excess of its revisional jurisdiction under section 115, Civil Procedure Code, and the order of remand and all proceedings taken subsequent to that order were illegal.
Section 115, Civil Procedure Code, applies to matters of jurisdiction alone, the irregular exercise or non exercise of it or the illegal assumption of it, and if a subordinate court had jurisdiction to make the order it has made and has not acted in breach of any provision of law or committed any error of procedure which is material and may have affected the ultimate decision, the High Court has no power to interfere, however profoundly it may differ from the conclusions of that court questions of fact or law.
Rajah Amir Hassan Khan vs Sheo Baksh Singh (1883 83) 11 I.A. 237, Bala Krishna Udayar vs Vasudeva Aiyar (1917) 44 IA.
261, Venkatagiri Ayyangar vs Hindu Religious Endowments Board 138 1949) 76 I.A. 67, Joy Chand Lal Babu vs Kamalaksha Chowdhury 1949)76 I.A.131 and Narayan Sonaji vs Sheshrao Vithoba (I.L.R. referred to.
Mohunt Bhagwan Ramanuj Das vs Khettar Moni Dassi and Gulab Chand Bargur vs Kabiruddin Ahmed , dissented from.
|
Appeal No. 51 of 1951.
Appeal from the Judgment and Decree dated the 11h September, 1945, of the High Court of Judicature at Allaha bad (Brand and Waliullah JJ.) in First Appeal No. 212 of 1942 arising out of the Judgment and Decree dated the 28th February, 1942, of the Court of the Civil Judge of Azamgarh in Original Suit No. 4 of 1941.
S.P. Sinha (Shaukat Hussain, with him) for the appel lants.
C.K. Daphtary (Nuruddin Ahmed, with him) for the re spondents.
Oct. 22.
The judgment of the Court was delivered by BHAGWATI J.
This is an appeal from the judgment and decree of the High Court of judicature at Allahabad which set aside a decree passed by the Civil Judge of Azamgarh decreeing the plaintiff 's claim.
One Haji Abdur Rahman, hereinafter referred to as Haji" a Sunni Mohammedan, died on the 26th January, 1940, leaving behind him a large estate.
He left him surviving the plain tiffs 1 to 3, his sons, plaintiff 4 his daughter and plain tiff 5 his wife, defendant 6 his sister, defendant 7 his daughter, by a predeceased wife Batul Bibi and defendants 1 to 4 his nephews and defendant 5 his grand nephew.
Plain tiffs case is that immediately after his death the defendant 1 who was the Chairman, Town Area qasba Mubarakpur and a member of the District Board, Azamgarh and defendant 5 who was an old associate of his started propaganda against them, that they set afloat a rumour to the effect that the plain tiffs 1 to 4 1135 were not the legitimate children of Haji and that the plain tiff 5 was not his lawfully wedded wife, that the defendants 1 to 4 set up an oral gift of one third of the estate in their favour and defendant 5 set up an oral will bequeathing one third share of the estate to him and sought to interfere with the possession of the plaintiffs over the estate and nearly stopped all sources of income.
It was alleged that under these circumstances a so called deed of family settle ment was executed by and between the parties on the 5th April, 1940, embodying an agreement in regard to the distri bution of the properties belonging to the estate, that plaintiff 3 was a minor of the age of about 9 years and he was represented by the plaintiff 1 who acted as his guardian and executed the deed of settlement for and on his behalf.
On these allegations the plaintiffs filed on the 25th Novem ber, 1940, in the Court of Civil Judge of Azamgarh the suit out of which the present appeal arises against the defend ants 1 to 5 and defendants 6 and 7 for a declaration that the deed of settLement dated 5th April, 1940, be held to be invalid and to establish their claim to their legitimate shares in the estate of Haji under Mohammedan Law.
The defendant 8 a daughter of the plaintiff 5 whose paternity was in dispute was added as a party defendant to the suit, the plaintiffs claiming that she was the daughter of the plaintiff 5 by Haji and the defendants 1 to 5 alleging that she was a daughter of the plaintiff 5 by her former husband Alimullah.
The only defendants who contested the claim of the plaintiffs were the defendants 1 to 5.
They denied that the plaintiff 5 was the lawfully wedded wife and the plaintiffs 1 to 4 were the legitimate children of Hail.
They also contended that the deed of settlement embodied the terms of a family settlement which had been bona fide arrived at between the parties in regard to the disputed claims to the estate of Haji and was binding on the plaintiffs.
It is significant to observe that the defendants 6 and 7 who were the admitted heirs of Haji did not contest the plaintiffs ' claim at all.
1136 The two issues which were mainly contested before the trial Court were, (I) Whether the plaintiffs 1 to 4 are the legitimate issue of and the plaintiff 5 is the wedded wife of Abdul Rahman deceased; (2) Whether the agreement dated 5th April, 1940, was executed by the plaintiffs after understanding its contents fully or was obtained from them by fraud or undue influence ? Was the said deed insufficiently stamped? Was it benefi cial to the minor plaintiffs ? As regards the first issue there was no document evi dencing the marriage between the plaintiff 5 and Haji.
The plaintiff 5 and Haji had however lived together as man and wife for 23 to 24 years and the plaintiffs 1 to 4 were born of that union.
There was thus a strong presumption of the marriage of Haji with plaintiff 5 having taken place and of the legitimacy of plaintiffs 1 to 4.
The trial Court did not attach any importance to the question of onus or pre sumption, examined the evidence which was led by both the parties with a view to come to a finding in regard to this issue, and found as follows: "So far as Musammat Rahima 's marriage with Alimullah or another Abdul Rahman is concerned the evidence of both the parties stands on the same level and is not worthy of much credit.
I have however, not the least hesitation to observe that so far as the oral evidence and the circumstances of the case are concerned, they all favour the plaintiffs.
I, however, find it difficult to ignore the testimony of the defendants ' witnesses Shah Allaul Haq and Molvi Iqbal Ahmad . . . .
Owing to the voluminous oral evidence adduced by the plaintiffs and the circumstances that apparently favour them, I gave my best attention to this case, but upon a careful consideration of the whole evidence on the record, I am not prepared to hold that the plaintiffs 1 to 4 are the legitimate issues of the plaintiff No. 5, the lawfully wedded wife of the deceased, Haji Abdul Rahman.
I frankly admit that the matter iS not free from difficulty and 1137 doubt but to my mind the scale leans away from the plain tiffs and I am not satisfied that their version is correct.
" On the second issue the learned trial Judge came to the conclusion that the disputed compromise amounted to a family settlement; that it was beneficial to the interests of the minor plaintiff and that it was made by the parties willing ly and without any fraud or undue influence.
On these find ings the suit was dismissed with costs.
The plaintiffs filed an appeal to the High Court of Judicature at Allahabad.
After considering the several authorities on the binding nature of family settlements cited before it came to the conclusion that it did not bind the plaintiffs.
As regards defendants 1 to 5 it was held that there was no consideration whatsoever which could in any way support the arrangement.
Plaintiffs 4 and 5 being Purdanashin ladies, it was found that they had no chance at any stage of the transaction of getting independent advice in regard to the contents or the effect of the document which they were executing and that even if the deed were valid otherwise it would not be binding on them.
It was further held that the plaintiff 3 who would be about 9 years of age at the time of the execution of the deed was repre sented in the transaction by his brother who could not be the legal guardian of his property and that the deed in so far as it adversely affected the interest of plaintiff 3 would not be binding on him.
On the question of marriage and legitimacy the High Court came to the conclusion that ii the trial Court had considered the question of onus in its proper light and given the plaintiffs the benefit of the initial presumption in favour of legitimacy and lawful wedlock under the Mahomedan law, he would have recorded a finding in their favour.
The defendants to 5 had alleged that at the time of the commencement of sexual relations between the plaintiff 5 and Haji, plaintiff 5 was the wife of one Alimullah who was alive and that therefore the con nection between the 1138 plaintiff 5 and Haji was in its origin illicit and continued as such, with the result that the presumption in favour of a marriage between the plaintiff 5 and Haji and in favour of the legitimacy of plaintiffs 1 to 4 would not arise.
The learned trial Judge disbelieved the evidence led by the defendants 1 to 5 in regard to this marriage between the plaintiff 5 and Alimullah.
The High Court upheld the finding and said: "All these circumstances, to my mind, strongly militate against the theory of a first marriage of Musammat Rahima Bibi with the man called Alimullah.
In this state of the evidence one cannot but hold that this story of the marriage with Alimullah was purely an after thought on the part of the defendants 1 to 5 and it was invented only to get rid of the strong presumption under the Mahomedan law in favour of the paternity of plaintiffs 1 to 4 and the lawful wedlock of the plaintiff 5.
" Having thus discredited the theory of the first mar riage of the plaintiff 5 with Alimullah the High Court came to the conclusion that it was fully established that Musam mat Rahima Bibi was the lawfully wedded wife and that the plaintiffs 1 to 4 are the legitimate children of Haji.
The defendants 1 to 5 obtained leave to appeal to His Majesty in Council and the appeal was admitted on the 10th January, 1947 Shri S.P. Sinha who appeared for the defendants 1 to 5 before us has urged the self same two questions, namely, (1) Whether the deed of settlement is binding on the plaintiffs and (2) Whether the plaintiff 5 was the lawfully wedded wife and the plaintiffs 1 to 4 are the legitimate children of Haji.
In regard to the first question, it is unnecessary to discuss the evidence in regard to fraud, undue influence, want of independent advice etc., as the question in our opinion is capable of being disposed of on a short point.
It is admitted that the plaintiff 3 Ishtiaq Husan was a minor of the age of about 9 years at the date of the deed, and he was not represented as 1139 already stated by any legal guardian in this arrangement.
The minor 's brother had no power to transfer any right or interest in the immovable property of the minor and such a transfer if made was void.
(See Mulla 's Mahomedan Law, 13th Edition, page 303,section 364).
Reference may be made to the decision of their Lord ships of the Privy Council in Imambandi vs Mut saddi(1).
In that case the mother who was neither the legal guardian of her minor children nor had been appointed their guardian under the Guardian and Wards Act had purported to transfer the shares of her minor children in the property inherited by them from their deceased father.
Mr. Ameer Ali who deliv ered the judgment of the Board observed at page 82 as follows : The question how far, or under what circumstances according to Mahomedan law,a mother 's dealings with her minor child 's property are binding on the infant has been frequently before the courts in India.
The decisions, howev er, are by no means uniform, and betray two varying tenden cies: one set of decisions purports to give such dealings a qualified force; the other declares them wholly void and ineffective.
In the former class of cases the main test for determining the validity of the particular transaction has been the benefit resulting from it to the minor; in the latter the admitted absence of authority or power on the part of the mother to alienate or incumber the minor 's property.
" The test of benefit resulting from the transaction to the minor was negatived by the Privy Council and it was laid down that under the Mahomedan law a person who has charge of the person or property of a minor without being his legal guardian, and who may, there fore, be conveniently called a "defacto guardian," has no power to convey to another any right or interest in immovable property which the transferee can enforce against the infant.
(1) (1918) 45 1.
A. 73.
1140 Shri S.P. Sinha relied upon a decision of the Calcutta High Court reported in Mahomed Keramutullah Miah vs Keramutulla (1) where it was held that there was nothing in the doctrine of family arrangements opposed to the general principle that when it was sought to bind a minor by an agreement entered into on his behalf, it must be shown that the agreement was for the benefit of the minor;that if improper advantage had been taken of the minor 's position, a family arrangement could be set aside on the ground of undue influence or inequality of position or one or other of the grounds which would vitiate such arrangement in the case of adults; but where there was no defect of this nature, the settlement of a doubtful claim was of as much advantage to a minor as to an adult, and where a genuine dispute had been fairly settled the dispute could not be reopened solely on the ground that one of the parties to the family arrangement was a minor.
This decision was reached on the 19th July, 1918, i.e., almost 5 months after the decision of their Lordships of the Privy Council, but it does not appear that the ruling was brought to the notice of the learned Judges of the Calcutta High Court.
The test of the benefit resulting from the transaction to the minor which was negatived by their Lord ships of the Privy Council was applied by the learned Judges of the Calcutta High Court in order to determine whether the family arrangement which was the subject matter of the suit before them was binding on the minor.
Shri S.P. Sinha next relied upon a decision of the Chief Court of Oudh, Ameer Hasan vs Md. Ejaz Husain(2).
In that case an agreement to refer to arbitration was entered into by the mother for her minor children and an award was made by the arbitrators.
The scheme of distribu tion of properties promulgated in the award was followed without any objection whatever for a long period extending over 14 years and proceedings were taken at the instance of the minors for recovery of possession by actual partition of their shares in the properties.
The Court held (1) A.I.R. 1919 Cal. 218.
(2) A.I.R. 1929 Oudh 134. 1141 that the reference to arbitration could not be held binding on the minors and the award could not be held to be an operative document, but if the scheme of distribution pro mulgated in the award was in no way perverse or unfair or influenced by any corruption or misconduct of the arbitra tors and had been followed without any objection whatever for a long period extending over 14 years, it would as well be recognised as a family settlement and the court would be extremely reluctant to disturb the arrangement arrived at so many years ago.
This line of reasoning was deprecated by their Lordships of the Privy Council in Indian Law Reports 19 Lahore 313 at page 317 where their Lordships observed "it is, however, argued that the transaction should be upheld, because it was a family settlement.
Their Lordships cannot assent to the proposition that a party can, by describing a contract as a family settlement, claim for it an exemption from the law governing the capacity of a person to make a valid contract.
" We are therefore unable to accept this case as an authority for the proposition that a deed of settlement which is void by reason of the minor not having been properly represented in the transaction can be rehabil itated by the adoption of any such line of reasoning.
If the deed of settlement was thus void it could not be void only qua the minor plaintiff 3 but would be void altogether qua all the parties including those who were sui juris.
This position could not be and was not as a matter of fact contested before us.
The contention of the defendants 1 to 5 in regard to the lawful wedlock between plaintiff 5 and Haji and the legitimacy of the plaintiffs 1 to 4 is equally untenable.
The plaintiffs had no doubt to prove that the plaintiff 5 was the lawfully wedded wife and the plaintiffs 1 to 4 were the legitimate children of Haji.
Both the Courts found that the factum of the marriage was not proved and the plaintiffs had therefore of necessity to fall back upon the presump tion of marriage arising in Mahomedan law.
If that presump tion of marriage arose, there would be no difficulty in 1142 establishing the status of the plaintiffs 1 to 4 as the legitimate children of Haji because they were admittedly born by the plaintiff 5 to Haji.
The presumption of marriage arises in Mahomedan law in the absence of direct proof from a prolonged and continual cohabitation as husband and wife.
It will be apposite in this connection to refer to a passage from the judgment of their Lordships of the Privy Council in Khajah Hidayut Oollah vs Rai Jan Khanurn(1).
Their Lord ships there quoted a passage from Macnaghten 's Principles of Mahomedan Law: "The Mahomedan lawyers carry this disinclination (that is against bastardizing) much further; they consider it legitimate of reasoning to infer the existence of marriage from the proof of cohabitation . .
None but children who are in the strictest sense of the word spurious are considered incapable of inheriting the estate of their putative father.
The evidence of persons who would, in other cases, be considered incompetent witnesses is admitted to prove wedlock, and, in short, where by any possibility a marriage may be presumed, the law will rather do so than bastardize the issue, and whether a marriage be simply voidable or void ab initio the offspring of it will be deemed legitimate . . . . .
This I apprehend, with all due deference, is carrying the doctrine to an extent unwarranted by law; for where children are not born of women proved to be married to their father, or of female slaves to their fathers, some kind of evidence (however slight) is requisite to form a presumption of matrimony. . . . . . .
The mere fact of casual concubinage is not sufficient to establish legiti macy ;and if there be proved to have existed any insurmount able obstacle to the marriage of their putative father with their mother, the children, though not born of common women, will be considered bastards to all intents and purposes.
" Their Lordships deduced from this passage the principle that where a child had been both to a father, of a mother where there had been not a mere casual (1) (1844) 3 Moore 's indian Appeals 295 at p. 317.
1143 concubinage, but a more permanent connection, and where there was no insurmountable obstacle to such a marriage, then according to the Mahomedan law, the presumption was in favour of such marriage having taken place.
The presumption in favour of a lawful marriage would thus arise where there was prolonged and continued cohabita tion as husband and wife and where there was no insurmount able obstacle to such a marriage, eg., prohibited relation ship between the parties, the woman being an undivorced wife of a husband who was alive and the like.
Further illustra tions are to be found in the decisions of their Lordships of the Privy Council in 21 Indian Appeals 56 and 37 Indian Appeals 105 where it was laid down that the presumption does not apply if the conduct of the parties was incompatible with the existence of the relation of husband and wife nor did it apply if the woman was admittedly a prostitute before she was brought to the man 's house (see Mulla 's Mahomedan Law, p. 238, section 268).
If therefore there was no insur mountable obstacle to such a marriage and the man and woman had cohabited with each other continuously and for a pro longed period the presumption of lawful marriage would arise and it would be sufficient to establish that there was a lawful marriage between them.
The plaintiff 5 and Haji had been living as man and wife for 23 to 24 years openly and to the knowledge of all their relations and friends.
The plaintiffs 1 to 4 were the children born to them.
The plaintiff 5, Haji, and the children were all staying in the family house and all the relations including the defendant I himself treated the plaintiff 5 as a wife of Haji and the plaintiffs 1 to 4 as his children.
There was thus sufficient evidence of habit and repute.
Haji moreover purchased a house and got the sale deed executed in the names of the plaintiffs 1 and 2 who were described therein as his sons.
The evidence which was led by the defendants 1 to 5 to the contrary was dis carded by the High Court as of a negative character 1144 and of no value.
Even when the deed of settlement was exe cuted between the parties the plaintiff 5 was described as the widow and plaintiffs 1 to 4 were described as the chil dren of Haji.
All these circumstances raised the presumption that the plaintiff 5 was the lawfully wedded wife and the plaintiffs 1 to 4 were the legitimate children of Haji.
The result therefore is that both the contentions urged by the defendants 1 to 5 against the plaintiffs ' claim in suit fail and the decree passed in favour of the plaintiffs by the High Court must be affirmed.
It was however pointed out by Shri S.P. Sinha that the High Court erred in awarding to the plaintiffs mesne profits even though there was no demand for the same in the plaint.
The learned Solicitor General appearing for the plaintiffs conceded that there was no demand for mesne profits as such but urged that the claim for mesne profits would be included within the expression "awarding possession and occupation of the property aforesaid together with all the rights appertaining thereto.
" We are afraid that the claim for mesne profits cannot be included within this expression and the High Court was in error in awarding to the plaintiffs mesne profits though they had not been claimed in the plaint.
The provision in regard to the mesne profits will therefore have to be deleted from the decree.
We dismiss the appeal of the defendants 1 to 5 and affirm the decree passed by the High Court in favour of the plain tiffs, deleting therefrom ' the provision in regard to mesne profits.
The plaintiffs will of course be entitled to their costs throughout from the defendants 1 to 5.
Appear dismissed.
Agent for the appellants ': V.P.K. Nambiyar.
| Under Mahomedan law a person who has charge of the person or property of a minor without being his legal guardian, i.e., a de facto guardian, has no power to convey to another any right or interest in immoveable property which the transferee can enforce against the minor.
The question whether the transaction has resulted in a benefit to the minor is immaterial in such cases.
Where disputes arose relating to succession to the estate of a deceased Mahomedan between his 3 sons, one of whom was a minor, and other relations, and a deed of settle ment embodying an agreement in regard to the distribution of the properties belonging to the estate was executed by and between the parties, the eldest son acting as guardian for and on behalf of the minor son: Held, that the deed was not binding on the minor son as his brother was not his legal guardian; as the deed was void it cannot be held as valid merely because it embodied a family arrangement; and the deed was void not only qua the minor, but with regard to all the parties including those who were sui juris.
Imambandi vs Mutsaddi [1918] 45 I.A.73 relied on Mohemed Keramatullah Miah vs Keramatulla (A.I.R. Ameer Hassan vs Md. Ejay Hussain (A.I.R. 1929 Oudh 134) commented upon.
1134 Under Mahomedan law if there was no insurmountable obstacle to a marriage and the man and woman had cohabited with each other continously and for a prolonged period/he presumption of lawful marriage would arise and it would be sufficient to establish a lawful marriage between them.
Khaja Hidayut Oollah vs Rat Jan Khanam (1844, 3 Moo I.A. 295) referred to.
|
Appeal No. 37 of 1952.
Appeal from the Judgment and Decree dated the 24th September, 1948, of the High Court of Judicature at Madras (Menon and Mack, JJ.) in A.A.O.No.
688 of. 1945 arising out of Judgment and Decree dated the 1st October 1945 of the Court of the ' District Judge of Anantapur in Original Petition No. 15 of 1945.
D. Munikanniah (J. B. Dadachandji" with him) for the appellant.
section P. Sinha(M. O. Chinnappa Reddi and K. B. Chowdhury withhim) for the respondents.
October 29.
The Judment of the Court was delivered by BHAGWATI J.
The plaintiff filed 0.
P. No. 15 of 1945 in the Court of the District Judge of Anantapur for setting aside an award the ground inter alia of legal misconduct of the arbitrator.
The trial Court set aside the award.
The High Court appeal reversed the judgment of the trial Court and dismissed the plaintiffs suit.
This appeal has been filed by the plaintiff with the certificate of the High Court against that decision.
One P.Narayanappa died in 1927 leaving him surviving the plaintiff his widow, the defendant I his undivided brother, the defendant 2 a son of his another pre deceased brother, and defedant 3 his son by his pre deceased wife. 'The deceased had purported to make a will dated 1st May, 1927 under which he had made certain provision for her maintenance , and residence, The plaintiff stayed with the family for 121 some time but had to leave the family house owing to disputes which arose between her and the senior wife of defendant 1.
She lived with her mother for eleven years and ultimately filed a suit in forma pauperis 0.
section No. 19 of 1943 in the Court of the District Judge of Anantapur, for maintenance, arrears of maintenance, residence and household utensils as also recovery of some jewels and clothes as her stridhanam properties.
The defendants contested the claim of the plaintiff contending that sufficient arrangement bad been made for her maintenance and residence under the will dated the 1st May, 1927, that she had accordingly been in possession and enjoyment of the property and that her claim was unsustainable.
The defendants also denied her claim for jewels and clothes.
The suit came for hearing and final disposal before the Subordinate Judge of Anantapur.
When the plaintiff was being examined as P.W. 1, in the suit the 27th February, 1945, all the parties filed a petition under section 21 of the Arbitration Act agreeing to appoint Sri Konakondla Rayalla Govindappa Garu as the 'sole arbitrator ' for settling the disputes in the suit and to abide by his decision, and asking the Court to send the plaint, written statement and other records to the arbitrator for his decision.
A reference to arbitration was accordingly made by the Court.
The arbitrator entered upon the reference and the 6th March, 1945, examined the plaintiff and got from her a statement which is Exhibit No. 4 in the record.
He similarly examined the defendant I the 10th March, 1945, and got from him the statement which is Exhibit No. 5 in the record.
After obtaining the two statements, the arbitrator made and published his award the 12th March, 1945.
It was this award that was challenged by the plaintiff.
The legal misconduct which was alleged against the arbitrator was that he examined each party in the absence of the other.
It was contended behalf of 122 the plaintiff that even though the petition for reference to arbitration as also the statements Exhibits Nos. 4 & 5 authorised the arbitrator to settle the disputes according to law after perusing the plaint and the written statements, the arbitrator examined defendant I in the absence of the plaintiff and also perused what was called the settlement of the 1st May, 1927, without giving an opportunity to the plaintiff to have her say in the matter and was thus guilty of legal misconduct.
It was contended the other hand by the defendants that what was done by the arbitrator was merely to obtain from the parties a reiteration of their request contained in the petition that he should give his award the basis of the pleadings, that not a single fact was recorded by the arbitrator from the defendant 1 which did not find a place in his written statement and that therefore the arbitrator was not guilty of legal misconduct.
The petition filed by the parties the 27th February, 1915,did not give any special powers to the arbitrator.
The arbitrator was appointed for settling the disputes in the suit and the parties agreed to abide by his decision.
The plaint, the written, statement and the other records were agreed to be sent to him for his decision, and if the arbitrator was thus directed to make his award after perusing the plaint and the written statements which were give to him by the Court along with the order, we do not see why the arbitrator went to the plaintiff and defendant 1 and recorded their statements.
The statement given by the plaintiff to the arbitrator did not mention anything beyond the request that be should peruse the plaint and written statement and give his decision according to law and justice.
The statement which was obtained from the defendant 1 however did not merely repeat this request but contained several statements of facts, which did not find a place in his written statement.
These statements were as follows: (1)"She felt glad with what was given to her by her husband.
" 123 (2)"It is seen from the Government accounts that as per the settlement made by her husband, the lands given to her have been in her possession." (3)"Just like the plaintiff has her jewels in her possession, the other females in the house have their jewels in their respective possession only.
The undivided family has no manner of right therein." and (4) "Considering the domestic circumstances our elder brother provided maintenance for the third wife, the plaintiff, just as he had provided maintenance for his second wife.
" These statements constituted evidence given by the defendant I in addition to the averments contained in his written statement and it is futile for the defendant 1 to contend that in obtaining the statement Exhibit No. 5 from him the arbitrator merely obtained from him a narration of what was already found in his written statement: This position is confirmed when one turns to the award.
The arbitrator stated that the Court had directed him to make the award after perusing the plaint and the written statements of the plaintiff and the defendants and that it had given him the plaint and the written statements along with the order.
He however proceeded to state that in pursuance of the order he took statements from the plaintiff as well as the defendant I who was the manager of the defendant 's family.
He further stated that he bad perused the settlement which the defendant 1 alleged as having been made Ist May, 1927, in favour of the plaintiff and proceeded to award to the plaintiff 8 acres 17 cents of land bearing Survey No. 507 in addition to the 40 acres of land already given by the deceased to her.
It is clear from the terms of this award that the arbitrator took into consideration not only the plaint and the written statements of the parties but also the statement which he had obtained from the defendant I and the will dated 1st May, 1927.
There is thus no doubt that the arbitrator heard the defendant 1 in the absence of the, plaintiff.
No 124 notice of this hearing was given by the arbitrator to the plaintiff nor had she an opportunity of having the evidence of the defendant I taken in her presence so that she could suggest cross examination or herself cross examine the defendant I and also be able to find evidence, if she could, that would meet and answer the evidence given by the defendant 1.
As was, observed by Lord Langdale M. R. in Harvey vs Shelton(1), "It is so ordinary a principle in the administration of justice, that no party to a cause can be allowed to use any means whatsoever to influence the mind of the Judge, which means are not known to and capable of being met and resisted by the, other party, that it is impossible, for a moment, not to see, that this was an extremely indiscreet mode of proceeding, to say the very least of it.
, It is contrary to every principle to allow of such a thing, and I Wholly deny the difference which is alleged to exist between mercantile arbitrations and legal arbitrations.
The first principles of justice must be equally applied in every case.
Except in the few cases where exceptions are unavoidable, both sides must be heard and each in the presence of the other.
In every case in which matters are litigated, you must attend to the representations made both sides, and you must not, in the administration of justice, in whatever form, whether in the regularly constituted Courts or in arbitrations, whether before lawyers or merchants, permit one side to use means of influencing the conduct and the decisions of the Judge, which means are not known to the other side.
This case of Harvey vs Shelton(1) is the leading case this point and it has been followed not only in England but in India.
(See Ganesh Narayan Singh vs Malida Koer(2).
She had also no opportunity to have her say in the matter of the settlement of the 1st May, 1927.
The course of proceeding adopted by the arbitrator was obviously contrary to the principles of ,natural justice.
(i) ; at P. 462.
(2) (1911) 13 c.
L. J. 399 at pages 401, 402, 125 Shri section P. Sinha however urged before us that no prejudice was caused to the plaintiff by reason of the arbitrator having obtained the statement Exhibit No. 5 from defendant 1 and that therefore the arbitrator was not guilty of legal misconduct.
This contention is unsound.
The arbitrator may be a most respectable man; but even so, his conduct cannot be reconciled to general principles.
"A Judge must not take upon himself to say, whether evidence improperly admitted had or had not an effect upon his mind The award may have done perfect justice: but upon general principles it cannot be supported.
" Per Lord Eldon, Lord Chancellor, in Walker vs Frobisher(1).
To the same effect are the observations of Lord Justice Knight Bruce in Haigh vs Haigh(1): "It is true that he states in his affidavit that he did not allow those explanations to influence him in his report upon the accounts, and I have no doubt he honestly intended this to be the case; but it is impossible to gauge the influence which such statements have upon the mind.
We must hold, without meaning the least reflection the arbitrator, that he was guilty of legal misconduct and that was sufficient to vitiate the award.
Shri section P. Sinha then urged that the plaintiff had waived her right if any to challenge the award the ground of legal misconduct.
No waiver however was pleaded by the defendant I and it was not competent to him to urge this contention at this stage before us.
The result therefore is that the judgment of the High Court cannot stand.
Agent for the respondents M. section K. Aiyangar, (i) (18o1) at page 72.
| Where, in an arbitration under section 21 of the Indian Arbitration Act, the arbitrator took statements from each of the parties in the absence of the other and made an award: Held, that it is one of the elementary principles of the administration of justice, whether by courts or by arbitration by lawyers or merchants, that a party should not be allowed to use any means whatsoever to influence 120 the mind of the judge or arbitrator, which means, are not known to and capable of being met and resisted by the other party; the arbitrator was accordingly guilty of legal misconduct; and this was sufficent to vitiate the award, irrespective of the fact whether this misconduct bad caused prejudice to any one.
Harvey vs Shelton ; , Ganesh Narayan Singh vs Malida Koer , and Haigh vs Haigh ; , referred to.
|
Appeal No. 147 of 1951.
Appeal from the Judgment and Decree dated September 4, 1946, of the late Chief Court of Oudh (now the High Court of Judicature at Allahabad, Lucknow Bench) (Misra and Wallford JJ.) in First Civil Appeal No. 139 of 1941, arising out of the Judgment,and Decree dated October 23, 1941, of the Court of the Civil Judge, Bahraich, in Regular Suit No. I of 1941.
234 Onkar Nath Srivastava for the appellant.
Bishan Singh for the respondent.
November 7.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is on behalf of the plaintiff and is directed against a judgment and decree of the Chief Court of Avadh dated September 4, 1946, affirming, on appeal, those of the Civil Judge, Bahraich, passed in Regular Suit No. 1 of 1941.
To appreciate the controversy between the parties to this appeal it would be necessary to state a few facts.
One Raja Bisheshwar Bux Singh, the father of the plaintiff and of the defendant 's husband, was a taluqdar of Oudh, and the estate known as Gangwat Estate, to which he succeeded in 1925 on the death of the widow of the last holder, is one to which the Oudh Estates Act (I of,1869) applies.
Raja Bisheshwar died on 16th October, 1930, leaving behind him two sons, the elder of whom, Bajrang Bahadur, is the plaintiff in the present litigation, while the younger, whose name was Dhuj Singh, has died since then, being survived by his widow Bakhtraj Kuer.
who is the defendant in the suit.
Shortly before his death Raja Bisheshwar executed a will dated 11th September, 1929, by which five properties, described in lists A and B attached to the plaint, were bequeathed to Dhuj Singh, the younger son, by way of making provisions for the maintenance of the said son and his heirs.
On the death of Raja Bisheshwar,the estatement to the plaintiff as his eldest son under the provisions of the Oudh Estates Act and Dhuj Singh got only he five properties mentioned above under the terms of his father 's will.
Dhuj Singh had no issue of his own and on his death in 1940 disputes arose in respect of these properties between the plaintiff on the one land and Dhuj Singh 's widow on the other.
The plaintiff succeeded at first in having his name mutated as owner of these properties in the revenue records in place of his deceased brother, but the appellate 235 revenue authority ultimately set aside this order and directed mutation to be made in the name of the defendant.
The plaintiff thereupon commenced the suit out of which this appeal arises, praying for declaration of his title to the five properties mentioned above on the allegation that they vested in him on the death of Dhuj Singh and that the defendant could not) in law, assert any right to, the same.
It may be stated here that four out of these five properties have been described in list A to the plaint and there is no dispute that they are taluqdari properties.
The fifth item is set out in list B and admittedly this property is not taluqdari in its character.
Besides lists A and B there is a third list, viz., Catached to the plaint, which mentions two other properties as being in possession of the defendant and in the plaint a claim was made on behalf of the plaintiff in respect to these properties as well, although they were not covered by the will of Bisheshwar.
This claim, however, was abandoned in course of the trial and we are not concerned with it in the present appeal.
The plaintiff really rested his case on a two fold ground.
It was averred in the first place that Dhuj Singh hadonly a life interest in the properties bequeathed to him by Bisheshwar and on the termination of his life interest, the property vested in the plaintiff as the heir of the late Raja.
In the alternative the case put forward was that even if Dhuj Singh had an absolute interest created in his favour under the terms of his father 's will, the plaintiff was entitled to succeed to the taluqdari properties at any rate, under the provision of section 14(b) read with section 22 (5) of the Oudh Estates Act.
The defendant in her written statement resisted the plaintiff 's claim primarily on the ground that Bisheshwar Bux Singh, as the full owner of the properties, was competent to dispose of them in any way he liked and under his will it was the defendant and not the plaintiff in whom the properties vested after the death of Dhuj Singh.
The contention, in .
substance, was that the will created a life estate for Dhuj 236 Singh followed by a devise in favour of the widow as his personal heir.
The decision of the point in dispute between the parties thus hinges on the proper construction of the will left by Bisheshwar.
The trial court after an elaborate consideration of the different portions of the will, viewed in the light of surrounding circumstances, came to the conclusion that Dhuj Singh got a life interest in the devised properties but there were similar life estates created in favour of his personal heirs in succession, the ultimate remainder being given to the holder of the estate when the line of personal heirs would become extinct.
The defendant, therefore, was held entitled to the suit properties so long as she was alive and in that view the plaintiff 's suit was dismissed.
Against this decision, the plaintiff took an appeal to the Chief Court of Avadh and the Chief Court affirmed the decision of the trial judge and dismissed the appeal.
The plaintiff has now come, up to this court on the strength of a certificate granted by the High Court of Allahabad with which the Chief Court of Avadh was amalgamated sometime after the disposal of this case.
The learned counsel appearing for the appellant first of all drew our attention to the provisions contained in certain sections of the Oudh Estates Act and it was urged by him on the basis of these provisions that as Dhuj Singh, who got the suit properties under the will of his father, the late.
Taluqdar, came within the category of persons enumerated in clause (1) of section 13 A, Oudh Estates Act, he could, under section 14 of the Act, hold the properties subject to the same conditions and the same rules of succession as were applicable to the, taluqdari himself.
In these circumstances, it is said that the provisions of section 22 (5) of the Act would be attracted to the facts of this case and the plaintiff, as the brother of Dhuj Siugh, would be entitled to succeed to the properties of the latter in preference to his widow.
The argument formulated in this way does not I appear to us to be helpful to the appellant.
Section.
11 237 of the Oudh Estates Act confers very wide powers of disposition upon a taluqdar and he is competent under the section "to transfer the whole or any portion of his estate, or of his right and interest therein, during his lifetime, by sale, exchange, mortgage, lease or gift, and to bequeath by his will to any person the whole or any portion of such estate, and interest.
" Sections 13 and 13 A make certain special provisions in cases of transfers by way of gift and bequest in favour of certain specified persons and lay down the formalities which are to be complied with in such cases.
Section 14 then provides that "if any taluqdar or grantee, or his heir or legatee, shall heretofore have transferred or bequeathed, or if any taluqdar:or grantee, or his heir or legatee shall hereafter transfer or bequeath the whole or any portion of his estate (a) . . . (b) to any of the persons mentioned in clauses (1) and (2) of section.
13 A, the transferee or legatee and his heirs and legatees shall have same rights and powers in regard to the property to which he or they may have become entitled under or by virtue of such transfer or bequest, and shall hold the same subject to the same conditions and to the same rules of succession as the transferor or testator.
" It is true that Dhuj Singh being a younger son of the testator came within the purview of clause (1) of section 13 A of the Oudh Estates Act and if he became full owner of the properties under the will of his father, succession to such properties after his death would certainly be regulated by the special rules of succession laid down in the Oudh Estates Act, and not by the ordinary law of inheritance.
But section 14 would have no application if the disposition by the will did not make Dhuj Singh an absolute owner of the properties and he was given only an interest for life which was followed by subsequent interests created in favour of 31 238 It cannot also be contended that a taluqdar governed by the Oudh Estates Act cannot convey anything less than his absolute proprietary right in a property by transfer inter vivos or by will, or that 'it is not competent for him to create any limited interest or future estate.
Apart from the plenary provision contained in section 11, section 12 of the Act which makes the rule against perpetuity applicable to transfers made by a taluqdar, furnishes a clear indication that the Act does not interdict the creation of future; estates and limitations provided they do not trans gress the perpetuity rule.
The questions, therefore, which require consideration in this case are really two in number.
The first is whether Dhuj Singh got an absolute estate or an estate for life in the properties given to, him by the will of Raja Bisheshwar? If he got an absolute estate, the contention of the appellant should undoubtedly prevail with regard to the taluqdari properties specified in list A of the plaint.
If, on the other hand,, the interest was one which was to inure only for the period of his life, the further question would arise as to whether any subsequent interest was validly created by the will in favour of the widow on the strength of which she can resist the plaintiff 's claim.
If the life estate was created in favour of Dhuj Singh alone, obviously the plaintiff as the heir of the grantor would be entitled to come in as reversioner after his death .
The answers to both the questions would have to be given on a proper construction of the will left by Raja Bisheshwar.
The will has been rightly described by the trial judge as a most inartistic document with no pretension to any precision of language, and apparently it was drawn up by a man who was not acquainted with legal phraseology.
The Civil Judge himself made a translation of the document, dividing its contents into several paragraphs and this was found useful and convenient by the learned Judges of the Chief Court.
The material portions of the will, as translated by the trial judge, may be set out as follows: 239 "As I have become sufficiently old and no reliance can be placed on life, by God 's grace I have got two sons namely, Bajrang Bahadur Singh, the elder, and Dhuj Singh the younger.
After my death the elder son would according to rule, become the Raja, the younger one is simply entitled to maintenance.
Consequently with a view that after my death the younger son and his heirs and successors, generation after generation, may not feel any trouble and that there may not be any quarrel between them.
I have decided after a full consideration that I should execute a will in favour of Dhuj Singh with respect to the villages detailed below.
So that after my death Dhuj Singh may remain in possession of those villages as an absolute owner with the reservation that he will have no right of transfer.
If God forbid, Dhuj Singh may not be living a the time of my death, his son or whoever may be his male heir or widow may remain in possession of the said villages on payment of the Government revenue as an absolute owner.
The liability for the land revenue of the said villages will be with Dhuj Singh and his heirs and successors; the estate will have no concern with it.
Although Dhuj Singh and his heirs are not given: the power of transfer, they will exercise all other rights of absolute ownership that is to say, the result is that the proprietor of the estate or my other heirs and successors will not eject Dhuj Singh or his heirs or successors in any way.
Of course if Dhuj Singh or his heirs become ever heirless then the said villages will not escheat to the Government but will revert and form part of the estate.
Hence with the soundness of my mind without any force or pressure and after having fully under , stood and also having thought it proper I execute this will in favour of Dhuj Singh, my own ;on, with the above mentioned terms.
" 240 The learned counsel for the appellant naturally lays stress upon the words "absolute owner " (Malik kamil) and " 'generation after generation? ' (naslan bad naslan) used in reference to the interest which Dhuj Singh was to, take under the will.
These words, it cannot be, disputed, are descriptive of a heritable and alienable estate in the donee, and they connote full proprietary rights unless there is something in the context or in the surrounding circumstances which indicate that absolute rights were not intended to, be conferred.
In all such cases the true intention of the testor has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
"The object of the testator in executing the will clearly set out in the preamble to the document and in spite of the somewhat clumsy drafting that object to have been kept in view by the testator throughout, in making the provisions.
The language and tenor of the document leave no doubt in OUT minds that the dominant intention of the testator was to make provision not for Dhuj Singh alone but for the benefit of his heirs and successors, " generation after generation " as the expression has been used.
The expression " heirs" in this context obviously means and refers to the personal heirs of Dhuj Singh determined according to the, general law of inheritance and not the successors to the estate under the special provisions of the Oudh Estates Act, for paragraph 6 of the will mentioned above is expressly intended to protect the personal heirs of Dhuj Singh from eviction from the properties in question by the future holders of the estate.
Thus the beneficiaries under the will are Dhuj Singh himself and his heirs in succession and to each such heir or set of heirs the rights of malik are given but without any power of alienation.
On the total, extinction of this line of heirs the properties affected by the will are to revert to the estate.
As it was the intention of the testator that the properties should 241 remain intact till the line of Dhuj Singh was exhausted and each successor was to enjoy and hold the properties without any power of alienation, obviously what the testator wanted was to create a series of life estates one after another, the ultimate reversion being given to the parent estate when there was a complete failure of heirs.
To what extent such intention could be, given effect to by law is another matter and that we shall consider presently.
But it can be said without hesitation that it was not the intention of the testator to confer anything but a life estate upon Dhuj Singh in respect of the properties covered by the will.
The clause in the will imposing total restraint on alienation is also a pointer in the same direction.
In cases where the intention of the testator is to grant an absolute estate, an attempt to reduce the powers of the owner by imposing restraint on alienation would certainly be repelled on the ground 'of repugnancy; but where the restrictions are the primary things which the testator desires and they are consistent with the whole tenor of the Will, it is a material circumstance to be relied upon for displacing the presumption of absolute ownership implied in the use of the word "malik".
We hold, therefore, that the courts below were right in holding that Dhuj Singh had only a life interest in the properties under the terms of his father 's will.
Of course this by itself gives no comfort to the defendant; she has to establish, in order that she may be able to resist the plaintiff 's claim, that the will created an independent interest in her favour following the death of Dhuj Singh.
As we have said already, the testator did intend to create successive life estates in favour of the successive heirs of Dhuj Singh.
This, it is contended by the Appellant is not permissible in law and he relies on the case of Tagore vs Tagore(1).
It is quite true that no interest could be created in favour of an unborn person but when the gift is made to a class or series of persons, some of (1) 18 Weekly Report 359.
242 whom are in existence and some are not, it does not fail in its entirety; it is valid with regard to the persons who are in existence at the time of the testator 's death and is invalid as to the rest.
The Widow, who is the next heir of Dhuj Singh, was in existence when the testator died and the life interest created in her favour should certainly take effect.
She thus acquired under the will an interest in the suit properties after the death of her husband, commensurate with the period of her own natural life and the plaintiff consequently has no present right to, possession.
The result, therefore, is that the appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant Rajinder Narain.
| The Oudh Estates Act (Act I of 1869) does not interdict the creation of future estates and limitations provided they do not transgress the rule of perpetuities and where a disposition by a will made by a taluqdar does not make the legatee an absolute owner but gives him only an interest for life which is followed by subsequent interests created in favour of other persons the rule of succession laid down in section 14 of the Act will not apply on the death of the donee and the property bequeathed to him will pass according to the will to the next person entitled to it under the will, 233 The words malik kamil (absolute owner) and naslan bad naslan (generation after generation) are descriptive of a heritable and alienable estate in the donee and they connote full proprietary rights unless there is something in the context or in the surrounding circumstances which indicate that absolute rights were not intended to be conferred.
In all such cases the true intention of the testator has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
In cases where the intention of the testator is to grant an absolute estate, an attempt to reduce the powers of the owner by imposing restraint on alienation would be repelled on the ground of repugnancy; but where the restrictions are the primary things which the testator desires and they are consistent with the whole tenor of the will, it is a material circumstance to be relied on for displacing the presumption of absolute ownership implied in the use of the word malik.
Though under the rule laid down in Tagore vs Tagore no interest could be created in favour of unborn persons, yet when a gift is made to a class or series of persons, some of whom are in existence at the time of the testator 's death and some are not, it does not fail in its entirety ; it will be valid with regard to the persons who are in existence at the time of the testator 's death and invalid as to the rest.
A will made by a taluqdar of Oudh recited that with a view that after his death his younger son D and his heirs and successors, generation after generation, may not feel any trouble or create any quarrel, D shall after the testator 's death remain in possession of certain villages as absolute owner, with the reservation that he will have no right to transfer, that if D may not be living at the time of his death D 's son or whoever may be his male heir or widow may remain in possession and that although D and his heirs are not given the power of transfer they will exercise all other rights of absolute ownership: Held, that the will did not confer an absolute estate on D and on D 's death the succession was not governed by section 14 of the Oudh Estates Act and D 's widow was entitled to succeed in preference to D 's elder brother.
|
o. 160 of 1952) under article 32 of the Constitution of India for the enforcement of fundamental rights.
The facts of the case and arguments of the counsel are stated fully in the judgment.
Petitioner No. I (Aswini Kumar Ghosh) in person.
B. Sen for the respondents.
N. C. Chatterjee (S.N. Mukherjee and B. Sen, with him) for the Incorporated Law Society, Calcutta High Court (Intervener No. 1) Dr. N. C. Sen Gupta (A. K. Dutt and V. N. Sethi, with him) for the Secretary, Bar Association, Calcutta High Court (Intervener No. 2).
N. C. Chatterjee (B. Sen, with him) for Secretary, Bar Library, Calcutta High Court (Intervener No. 3).
C. K. Daphtary, Solicitor General for India (G. N. Joshi and J. B. Dadachanji, with him) for the Secretary, Bar Association, Bombay High Court (Intervener No. 4).
K. B. Naidu for Secretarv, Advocates ' AssociationMadras High Court (Intervener No. 5).
M. C. Setalvad, Attoney General for India (Intervener No. 6).
October 27.
The The judgment of Patanjali Sastri C.J. and Vivian Bose and Ghulam Hasan JJ. was delivered by Patanjali Sastri C. J. Mukherjea and, Das JJ.
delivered separate judgments.
5 PATANJALI SASTRI C. J.
This is an application under article 32 of the Constitution for relief in respect of an alleged infringement of the fundamental right of the petitioners under article 19 (1) (g) or, alternatively, under article 136 for special leave to appeal from a judgment of the High Court of Judicature at Calcutta rejecting their application for the same relief under article 226.
As the petitioners would clearly be entitled to relief under the one or the other form of remedy if their claim was well founded, no objection was taken to the maintainability of the present proceeding, and we desire to guard ourselves against being taken to have decided that a proceeding under article 32 would lie after an application under article 226 for the same relief the same facts had been rejected after due enquiry by a High Court.
We express no opinion that point.
The facts leading to this proceeding are not in dispute and may be briefly stated.
The first petitioner is an Advocate of this Court and his name is also the roll of Advocates of the High Court of Calcutta.
As an Advocate of the latter Court he is entitled, under the relevant rules there in force, both to act and to plead the Appellate Side but not to act or to appear, unless instructed by an Attorney, the Original Side.
18th July, 1951, he filed in the Registry the Original Side a warrant of authority executed in his favour by the second petitioner to defend the latter in a pending suit.
The warrant was returned 27th July, 195 1, with the endorsement that it "must be filed by an Attorney of this Court under the High Court Rules and Orders, Original Side, and not by an Advocate".
The return was made by an Assistant in charge of Suit Registry Department, who is called as the first respondent to this petition.
The second respondent is the Registrar, Original Side, who is alleged to have refused the same ground to accept a warrant filed earlier in a company matter.
It is conceded that the action of the respondent would be 6 valid apart from the right claimed by the first petitioner as an Advocate of this Court under the Supreme Court Advocates (Practice in High Courts) Act, 1951, (hereinafter referred to as the new Act) which provides that such Advocates are " entitled as of right to practise" in any High Court in India.
The petitioners, however, claimed that the right to practise thus conferred included also the right to act as well as to appear without the intervention of an Attorney the Original Side, and moved the High Court under article 226 for issue of appropriate writs orders or directions to the respondent for enforcement of the right denied to them.
A Special Bench consisting of Trevor Harries C.J., Chakravartti and Banerjee JJ.
heard the motion and dismissed it, holding that the first petitioner did not, being enrolled as an Advocate of the Supreme Court, become entitled to act the Original Side of the Court.
The second petitioner has since dropped out of these proceedings, and the first petitioner, who appeared in person and argued his case before us, is hereinafter referred to as the petitioner.
I As the issues involved are of far reaching importance to certain sections of the Bar at Calcutta and at Bombay, this Court directed notice of the proceeding to be served the Incorporated Law Society, Secretary Bar Association, and Secretary, Advocates ' Association, Calcutta High Court, and Secretary, Bar Association, Bombay High Court, and all of them appeared by their learned counsel, while the Attorney General appeared in person as intervener.
We have thus had the advantage of a full argument from all points of view.
A brief historical survey of the functions, rights and duties of legal practitioners in this country may facilitate appreciation of the contentions of the parties.
Before the Indian High Courts Act of 1861 (24 and 25 Vic.
104) was enacted, there were, in the territories subject to the British rule in India, Supreme Courts exercising jurisdiction mainly in the 7 Presidency Towns and Sudder Courts exercising jurisdiction over the mofussil.
Though the Supreme Courts were given, by the Charter Acts and the Letters Patent establishing them, power to enroll Advocates who could be authorised by the rules to act as well as to plead in the Supreme Courts, rules were made empowering Advocates only to appear and plead and not to act, while Attorneys were enrolled and authorised to act and not to plead.
In the Sudder Courts and the Courts subordinate thereto, pleaders who obtained a certificate from those Courts were allowed both to act and plead.
When the Supreme Courts and the Sudder Courts were abolished and their jurisdictions were transferred to High Courts under the statute of 1861, this differentiation in the functions of legal practitioners was continued in the High Courts under the notion, apparently, that the High Court, in the exercise of its Ordinary Original Jurisdiction, was the successor of the Supreme Court, and that, the Appellate Side, it inherited the jurisdiction and powers of the Sudder Courts, with the result that Advocates were allowed only to appear and plead instructed by Attorneys empowered to act the Original Side as in the Supreme Court, while the Appellate Side, they were allowed both to act and plead as in the Sudder Courts.
There was also another class of practitioners known as Vakils who were neither allowed to act nor to plead the Original Side, but were allowed both to act and plead the Appellate Side.
Within a short time, however, the Vakils at Madras were permitted by a rule made by the High Court to appear, plead and act the Original Side as wel1 vide In the Matter of the Petition of the Attorneys(1) but the cleavage between the two jurisdictions, Original and Appellate, was maintained in the Calcutta and Bombay High Courts with modi fications by means of rules framed by the respective High Courts from time to time.
While this was the position in the High Courts in the three Presidency Towns of Calcutta, Bombay and Madras, no distinction (1) (1876 78) I.L.R. I Mad.
24. 8 was drawn between Advocates and Vakils (except in the matter of authorisation by their clients) as regards their right to appear, plead and act in the other High Courts subsequently established in British India without original jurisdiction.
The position in these Courts was correctly stated by a Full Bench of the Allahabad High Court thus: " Not only by the Letters Patent but by the Civil Procedure Code, an Advocate may act for his client in this Court in the manner in that statute set forth and do all things that a Pleader, that is, a Vakil, may do, provided always that he.
be upon the Roll of the Court 's Advocates": Bakhtawar Singh vs Sant Lal(1).
In this situation, the , (Act XVIII of 1879) which consolidated and amended the law relating to Legal Practitioners was passed.
By section 4 it empowered the Advocates and Vakils enrolled in any High Court to "practise" in all subordinate courts and in any other High Court with the "permission" of the latter Court.
No Vakil or 'Pleader, however, was to be entitled to "practise" in a High Court exercising jurisdiction in a Presidency Town.
By section 5 all persons enrolled as Attorneys in any High Court became "entitled to practise" in all courts .subordinate to such High Court and in any court in British India other than a High Court established by Royal Charter the roll of which he is not entered.
It is worthy of note that the right to practise thus conferred included the right to plead a,; well as to act in all the courts referred to above.
Then came the , which was enacted in response to a demand by the legal profession for unification and autonomy of the Bar, and it achieved a certain measure of both, eliminating the two grades of practitioners, the Vakils and the Pleaders, by merging them in the class of Advocates who, were "entitled as of right to practise" in the High Courts in which they were enrolled and in any other court in British India, subject to certain (1) (1887) 9 All. 617, 621.
9 exceptions.
It also provided for the constitution of Bar Councils for the High Courts with power to regulate the admission of Advocates, to prescribe their qualifications and to inquire into any case of miscouduct that may be referred to them.
But the right to practise and the power to make rules were not to limit or in any way affect the unlimited powers of the High Courts at Calcutta and Bombay to make rules allowing or disallowing Advocates to practise their Original Side: (vide section 9 (4) and section 14).
While such was the position of Advocates in the courts in what used to be known as British India, it is not a matter of dispute that Advocates practising in the courts of what were known as Indian States were allowed to appear, plead and act behalf of suitors.
It will thus be seen that legal practitioners, by whatever name called, practising in all the High Courts in India, except the Original Side of the Calcutta and Bombay High Courts, and in the innumerable subordinate courts all over India were always entitled to plead as well as to act.
In the Original Side of the Calcutta and Bombay High Courts alone, where the cleavage between the Original and Appellate jurisdictions continued to be marked, due, as we have seen, to historical reasons, the functions of pleading and acting, which a legal practitioner normally combines in his own person, were bifurcated and assigned, following "the usage and the peculiar constitution of the English Bar" (per Lord Watson in the case cited below), to Advocates and Attorneys respectively.
In this situation, the establishment of the Supreme Court of India, exercising appellate jurisdiction over all the High Courts naturally stimulated the demand for the unification of the Bar in India, and Parliament enacted the new Act as a step towards that end.
It is a brief enactment intituled "an Act to authorise Advocates of the Supreme Court to practise as of right in any High Court" and consists of only two 10 sections.
Section I describes the short title of the Act and section 2 enacts (so far as material here : "Notwithstanding anything contained in the , or in any other law regulating the conditions subject to which a person not entered in the roll of Advocates of a High Court may, be permitted to practise in that High Court every Advocate of the Supreme Court shall be entitled as of right to practise in any High Court whether or not he is an Advocate of that High Court: Provided that nothing in this section shall be deemed to entitle any person, merely by reason of his being an Advocate of the Supreme Court, to practise in any High Court of which he was at any time a judge, if he bad given an undertaking not to practice therein after ceasing to hold office as such judge.
" According to the petitioner 's contention, an Advocate of the Supreme Court becomes entitled as of right to appear and plead as well as to act in all the High Courts including the High Court in which he is already enrolled, without any differentiation being made for this purpose between the various jurisdictions exercised by those courts.
The word "practise" as applied to an Advocate in India includes both the functions of acting and pleading, and there is nothing in section 2 to warrant the cutting down of that statutory right to pleading only the Original Side of the Calcutta High Court as the respondents seek to do.
the other hand, the respondents contend that the non obstante clause in the first part of the section furnishes the key to the proper interpretation of its scope, and inasmuch as that clause supersedes only those pro visions of the Bar Councils Act, and of any other law which exclude persons not entered in the roll of Advocates of a High Court from the right to practise in that Court, the enacting clause must be construed as conferring only a right co extensive with the disability removed by the opening clause; that is to say, the section is designed only to enable Advocates of the Supreme Court who are not enrolled as 11 Advocates of any High Court to practise nevertheless in that High Court.
The petitioner, who is already an Advocate of the Calcutta High Court, could derive no additional right from the section in relation to that Court, as he does not fall within the purview of the section.
Alternatively, even if the provision is read as conferring Advocates of the Supreme Court the right to practise in relation to all the High Courts in India, including the High Courts in which they are already enrolled, the section does no more than entitle them to practise in conformity with the conditions subject to which advocates are permitted to practise in those Courts, for the word "practise" is a term of indefinite import and, as applied to an Advocate, it may mean pleading or acting or both, according to the conditions under which the profession of an Advocate is exercised in the court concerned.
Both branches of this contention have found favour with the learned Judges of the court below.
A third view was also suggested in the course of the debate before us.
An Advocate of the Supreme Court is entitled under the Rules of that Court only to appear and plead and not to act, while Agents who are enrolled as such are entitled only to act but not to appear and plead.
In dealing with the right of Advocates of the Supreme Court to "practise" in the High Courts, Parliament must therefore be taken to have used that word in the sense only of appearing and pleading, the object of section 2 being only to confer the Supreme Court Advocates the right to appear and plead in all the High Courts and no further or other right.
Having given the matter our most careful and anxious consideration, we have come to the conclusion that the petitioner 's contention is correct and must prevail.
As we have already seen, there are in this country more than 20 High Courts (including the Judicial Commissioners ' Courts which are treated as High Courts for this purpose), and in all these 12 High Courts excepting the original jurisdiction of the Calcutta and Bombay High Courts and in all the numerous subordinate courts, both civil and criminal, existing all over the country, an Advocate combines in himself both the functions of acting and pleading which constitute the.
normal activities of all legal practitioners except members of the English Bar whose "usage and peculiar constitution" allow them only to appear and plead and not to act.
It would seem that this peculiar British system of division of functions between Barristers and Attorneys is not in vogue even in all the British Dominions and Colonies.
For instance, in the report of the case Queen vs Doutre(1), we find counsel for the respondent stating in the course of his argument that "In all the Provinces of Canada the functions of Barristers and Solicitors are united in the same person and the rules of the English Bar do not apply there".
In upholding in that case the right of counsel to sue for and recover a quantum meruit in respect of professional services rendered by him, the Judicial Committee remarked: "Their Lordships entertain serious doubts whether in an English Colony where the common law of England is in force, they (i.e., general considerations of public policy) could have any application to the case of a lawyer who is not a more advocate or pleader and who combines in his own person various functions which are exercised by legal practitioners of every class in England all of whom, the Bar alone excepted, can recover their fees by an action at law.
" It seems reasonable, therefore, to assume that the practice of law in this country generally involves the exercise of both the functions of acting and pleading, behalf of a litigant party; in other words, the Bar in India, generally speaking, is organised as a single agency.
Accordingly, when the Legislature confers upon an Advocate "the right to practise" in a Court, it is legitimate to understand that expression as authorising him to appear and plead as well as to (1)(1883) 9 App.
13 act behalf of suitors in that Court.
It is true that the word "practice" used in relation to a given profession means simply the pursuit of that profession and involves the exercise of the functions which are cordinarily exercised by the members of the pro fession.
But it seems to be fallacious to relate that expression, as applied to an Advocate, either, the one, hand, to the Court in which the Advocate is enrolled or, the other, to the Court in which he seeks to exercise the statutory right conferred him.
It must, in our opinion, be related to the general constitution of the Bar in India as a single agency in dealing with the litigant public, a system which prevails all over this vast country except in two small pockets where adual agency imported from England was maintained, owing, as we have seen, to historical reasons.
We are accordingly unable to accept the suggestion that because the Advocates of the Supreme Court are not, under the Rules of that Court, entitled to act, the word "practise" as used by Parliament in section 2 must be understood in the restricted sense of appearing and pleading only.
Parliament was, of course, aware that the right of the Advocates of the Supreme Court to practise in that Court was confined only to appearing and pleading, but the object of section 2 was to confer upon a designated body of persons, namely, the Advocates of the Supreme Court, a right to practise in other courts, viz., the various High Courts in India, whether or not they were already enrolled in such courts.
This statutory right, which is conferred the Supreme Court Advocates in relation to other courts and which they did not have before) cannot, as a matter of construction, be taken to be, controlled by reference to what they are allowed or not allowed to do in the Supreme Court under the Rules of that Court.
Such Rules are liable to be altered at any time in exercise of the rule making power conferred by article 145 of the Constitution.
The scope and 14 content of the new statutory right conferred in relation to the High Courts could not have been intended to depend the varying scope of the functions which the Supreme Court Advocates are allowed to, exercise in that Court from time to time.
Besides, the consequences of such a construction would be somewhat startling.
For instance, if an Advocate of the Supreme Court not entered the Roll of the Allahabad High Court desired to practise in the latter Court where there are no Attorneys or Agents, he would find himself in a difficult situation.
It was said that a, local Advocate could be engaged to instruct him, acting for the client.
Even if it were permissible to substitute a local Advocate for an "Agent" to overcome the disability imposed by Order IV, Rule 11, of the Supreme Court Rules which prohibits an Advocate from appearing "unless he is instructed by an Agent", it would be tantamount to introducing a new type of dual agency where it does not exist at present, an innovation which, we think, could hardly have been contemplated.
Such an interpretation would also render the right conferred by the new Act largely illusory in practice.
The construction adopted by the learned Judges of the High Court, which relates the word "practise" in section 2 to the High Court in which the Supreme Court Advocate seeks to exercise his right, seems to us to be equally open to objections.
In their view, that word as applied to the same Advocate should be understood in a wider or narrower sense in relation to different High Courts, and indeed, to different jurisdictions of the same High Court, according to the rules there in force.
They say: "Since the section applies to a number of different High Courts where different conditions of practice prevail, the word 'practice ' has no one particular and invariable meaning in the section but its meaning must vary according as the section is applied to one High Court or another.
In its application to each High Court it will have the meaning which an Advocate 's right to practise bears in that Court at 15 the time under the local rules and regulations.
This meaning may be wider in relation to one High Court and narrower in relation to another, and even in relation to the same High Court it may not always remain the same, for a High Court may enlarge the professional rights of its Advocates and if it does so, Advocates of the Supreme Court will, thereafter, have the enlarged rights in that Court.
But at any given point of time the rights of an Advocate of the Supreme Court to practise in any particular High Court in exercise of the power conferred him by section 2 can at most be co extensive with but no greater than the right which Advocates of that Court themselves possess at the time.
" We are unable to agree with this ambulatory inter pretation of section 2.
It may be that the full sense of the word "practise" as including.
, both acting and pleading may be out down by the context in which it is used in a particular statute.
But we do not find any such context in the language of the new Act or in its object as we conceive it.
The construction which the learned Judges have placed section 2 was supported before us by attributing to the word ((practise" the "dictionary meaning", as it was called, of exercising a profession and postulating the exercise by the Advocate of the Supreme Court of different professions in different High Courts in which he may seek to appear.
Thus, he exercises the profession of a Madras Advocate while appearing in Madras; the profession of an.
Appellate Side Advocate or of an Original Side Advocate, as the case may be, while appearing those sides of the Calcutta and the Bombay High Courts, and so .
The object of this curious differentiation is to read the different conditions under which.
an Advocate exercises his professsion in each of those Courts or jurisdictions into the word "practise" itself as the necessary implication of its dictionary meaning so as to bring in the exclusion of acting the Original Side as part of its connotation.
We find it difficult to appreciate this view.
The Advocate of the Supreme Court in all the cases 16 referred to above seeks to practise only one profession, namely, the profession of an Advocate.
As such he would be bound to observe the rules of practice of each Court, that is, the prescribed procedure for conducting legal proceedings in the Court concerned; but a rule which denies to him the right to exercise an essential part of his function by insisting a dual agency the Original Side is much more than a rule of practice and the power of making such a rule, unless expressly reserved by the new Act, as it was reserved in section 9 (4) and section 14(3) of the Bar Councils Act, would be repugnant to the right conferred by section 2.
In this connection, it may be pertinent to point out that the power of the High Courts to make rules of practice regulating the procedure to be followed in the conduct of proceedings before them and the power to frame rules regulating the admission and conduct of legal practi tioners were always derived from distinct sources originally under different clauses of the Letters Patent establishing them and later from the Civil Procedure Code and the Bar Councils Act.
The learned Judges have also overlooked an important distinction between the position of an Advocate of the Calcutta or the Bombay High Court in relation to his Court and that of an Advocate of the Supreme Court in relation to those Courts.
The former is not entitled to practise "as of right" the Original Side of his High Court as his right to practise is made under section 14(1) (a) expressly subject to section 9(4) which reserves the power of those Courts to exclude him from such right so far as the Original Side is concerned.
In other words,the local Advocate is not entitled "as of right" to practise the Original Side of those two High Courts, whereas it is open to argument and indeed is now argued that the Advocate of the Supreme Court becomes under the new Act entitled to practise "as of right" in all High Courts without any distinction in the matter of the jurisdictions exercised by them, because no, such power is preserved and continued in the new Act.
In view of this 17 difference, which is vital to the petitioner 's contention, it is not correct to say that the right conferred the Supreme Court Advocate "can at most be co extensive with but no greater than the right which Advocates of that Court themselves possess at the time".
Here, indeed, we reach the crux of the whole case.
Now, section 14(1) (a) of the Bar Councils Act enacts 14.(1) An Advocate shall be entitled as of right to practise (a) subject to the provisions of subsection (4) of section 9, in the High Court of which he is an Advocate," and Section 9(4) provides: "Nothing in this section or in any other, provision of this Act shall be deemed to limit or in any way affect the powers of the High Courts of Judicature at Fort William in Bengal and at Bombay to prescribe the qualifications to be possessed by persons applying to practise in those High Courts respectively in the exercise of their original jurisdiction or the powers of those High Courts to grant or refuse, as they think fit, any such application, or to prescribe the conditions under which such persons shall be entitled to practise or plead." Section 14(3) reads "Nothing in this section shall be deemed to limit or in anyway affect the power of the High Court of Judicature at Fort William in Bengal or of the High Court of Judicature at Bombay to make rules determining the persons who shall be entitled respectively to lead and to act in the High Court in the exercise of its original jurisdiction.
" It is to be noted that by virtue of the last two provisions to which the right of local Advocates is made expressly subject, the High Courts of Calcutta and Bombay have the power to "grant or refuse as they think fit" the application of any person applying to practise in the Original Side of those Courts, and the power to make rules laying down who shall plead and 18 who shall act that side.
It is in exercise of these powers that the High Courts have framed the rules, to which reference has been made, cutting down the right of the Advocates of those Courts to practise the Original Side to appearing and pleading only and otherwise imposing restrictions that right, such as, that they shall not appear unless instructed by an Attorney.
That is to say, the Advocates of those Courts are not entitled to practise as of right the Original Side.
As the powers thus reserved are exercisable only in regard to the Original Side, the Advocates of these Courts are under section 14(1) (a) entitled as of right to practise in the appellate and other jurisdictions exercised by those Courts.
Similarly, under section 2 of the new Act every Advocate of the Supreme Court is entitled as of right to practise in any High Court.
But it is significant that no power is reserved, to the Calcutta or the Bombay High Courts to cut down this statutory right and confine it to pleading alone the Original Side.
Why were the reservations which the Legislature took care to insert in the Bar Councils Act in conferring a statutory right of practice Advocates of the High Courts omitted in the new Act in conferring a similar right in similar terms the Advocates of the Supreme Court in relation to the High Courts? Why this departure from the pattern of what is, in this respect, a closely analogous piece of legislation? The respondents made two,answers to this question neither of which seems to us satisfactory.
One was that the word "practise" itself connoted, in relation to the Original Side of the Calcutta and Bombay High Courts, only pleading and not acting, as Advocates of those Courts practising that side had long been only appearing and pleading instructed by Attorneys who acted for the suitors.
This argument we have already rejected.
But, even so, why insert section 9(4) in the Bar Councils Act and make the right under section 14(1) (a) subject to the overriding powers under section 9(4)? If the argument were valid, such provisions would have been wholly unnecessary, for, 19 even in their absence, the word "practise" would con .
note only pleading and not acting.
This indeed is an additional ground for rejecting that construction.
It is legitimate, therefore, to conclude that the Legiglature used the word "practise" both in the Bar Councils Act and in the new Act in its full sense of acting and pleading, but while in the case of Advocates of the Calcutta and Bombay High Courts it has expressly preserved and continued the power of those courts to restrict or exclude the right of practice the Original Side, it has reserved no such overriding power under the new Act with the result that any restrictive rule cutting down the statutory right would be repugnant to section 2 and therefore void and inoperative.
A similar view of the effect of section 14(1) (a) of the Bar Councils Act was expressed by a Full Bench of the Madras High Court in Powers of Advocates, In re (1), where it was held that a rule made by that Court excluding the Advocates enrolled there from acting the Insolvency Side became invalid and inoperative after the enactment of that Act, and we entirely agree with that decision.
The learned Judges below attempted to distinguish that case, as Mr. Chatterjee for the respondents did before us, by observing that because the Bar Councils Act made no distinction between the different jurisdictions of the Madras High Court and the rules of that Court allowed the Advocates to act and plead the Original as well as the Appellate jurisdiction thereof, the learned Judges construed the word "practise" in section 14 to mean both acting and pleading.
That is not a correct view of the reasoning employed by the Full Bench.
The learned Judges failed to see that such reasoning would indeed lead to the opposite conclusion.
As a matter of, fact, there was a rule under which the local Advocates were prevented from acting and they had accordingly not acted in the insolvency jurisdiction of that Court, so that if "practise" in section 14(1) (a) were to be construed (1) Mad. 92, 20 in the light of what the Advocates bad been doing in the past under the rules of that Court, the Court would have had to hold that the Advocates acquired no new right by virtue of section 14(1) (a) But the Full Bench held that they did and the gist of their reasoning was thus put by Kumaraswami Sastri J. who delivered the leading judgment: "The word 'practise ' ordinarily means 'appear, act and plead, unless there is anything in the subject or context to limit its meaning.
I am of opinion that where an Act confers rights to a party in general terms and entitles him to perform more than one function, the cutting down of those rights by a rule would make that rule repugnant to the provisions of the Act.
" It was next suggested that no support for the petitioner 's contention could be derived from the absence in the new Act of reservations like those contained in sections 9 (4) and 14 (1) (a) of the Bar Councils Act because the power of framing rules regarding legal practitioners given to the Chartered High Courts under their respective Letters Patent could be exercised only in respect of the Advocates enrolled in those Courts, and the reservation of a power so limited would be meaningless in the new Act which deals with the rights of the Supreme Court Advocates.
This argument overlooks that those High Courts had unfettered discretion to admit or to refuse admission to any person to practise as an Advocate, Vakil or Attorney.
Clause 9 of the Letters Patent of the Calcutta High Court, for instance, empowers that Court "to approve, admit and enroll such. .
Advocates, Vakils and Attorneys as to the said High Court shall seem meet".
The Bar Councils Act also assumed that a power to exclude any person from practising the Original Side existed in the High Courts, as is shown by section 9 (4) which provides that nothing contained in that Act shall be deemed to affect the power of the Calcutta and the Bombay High Courts to grant or refuse the application of "persons " applying to practise the Original Side of 21 those Courts or their power to prescribe the conditions under which " such persons" could practise that side.
Be it noted that the word used is not " Advocates " which, in view of the definition in section 2 (1) (a), would indicate a power confined to the Advocates of those Courts.
And when that Act proceeded to empower by section 14 (1) (a) an Advocate enrolled in a High Court to practise as of right in that Court, it took care to make it clear that the right so conferred was subject to the exercise of the power reserved under section 9 (4).
But, as pointed out already, it is significant that Parliament, in conferring a similar right under the new Act the Supreme Court Advocates, did not reserve any such overriding power.
In the absence of such reservation, the statutory right of a Supreme Court Advocate to plead as well as to act in the High Courts of Calcutta, and Bombay in the exercise of their original jurisdiction cannot be taken away or curtailed by those Courts, and any rules which they may have made in the past purporting to.
exclude any Advocate from acting their Original Side, or from appearing and pleading unless he is instructed by an Attorney cannot affect such right.
Turning now to the non obstante clause in section 2 of the new Act, which appears, to have furnished the whole basis for the reasoning of the Court belowand the argument before us closely, followed 'that reasoning we find the learned Judges begin by inquiring what are the provisions which that clause seek , to supersede and then place upon the enacting clause such Construction as would make the right conferred by it co extensive with the disability im posed by the superseded provisions.
The meaning of the section will become clear", they, obser, "if we examine a little more closely what the, section in fact supersedes or repeals.
The disability which the section removes and the right which it confers are coextensive.
" This is not, in our judgments a correct approach, to the construction of section 2.
It should 4 22 first be ascertained what the enacting part of the section provides, a fair construction of the words used according to, their natural and ordinary meaning, and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment.
We will revert to this clause again presently.
Following their line of approach, the learned Judges reached two conclusions: first, that section 2 confers no new right an Advocate of the Supreme Court in relation to the High Court in which he is already enrolled, but gives him the right to practise in the High Courts in: the roll of which he was not entered as, an Advocate.
The petitioner was accordingly not within the purview of the section in relation to the Calcutta High Court of which.
he was already an Advocate; and secondly, that the only pro visions superseded by the non obstante clause are section 8 (1) and section 14 (2) of the Bar Councils Act and Rule 38 of Ch.
V of the Original Side Rules of the Calcutta High Court and a similar rule framed under section,15 (b) of the Bar Councils Act by the Calcutta Bar, Council, which prescribe the conditions subject to which Advocates of other High Courts are permitted to practise the Original and Appellate Sides of.
that Court and the corresponding rules then in force in, the Bombay High Court.
These provisions alone, it was said fell within the description " regulating the conditions subject to which a person not eptered in the roll of Advocates of a High Court may be.
permitted to practise in that High Court.
" All other provisions of the Bar Councils Act,, including sections 9 (4) and 14 (3), as well as other rules of the Original.
Side of both Calcutta and Bombay High Courts have not been superseded or repealed by section 2 of the new, Act but continue in force.
We now proceed to examine whether these conclusions are well founded.
Much ado was made an both sides ;about the comina occurring just before the word " or " in the 23 non obstante clause, the petitioner stressing its importance as showing that the adjectival clause " regulating the conditions etc.
" does not qualify the words " " which are separated by the comma and that, therefore, the whole of that Act is superseded, while 'learned counsel for the respondents insisted that in construing a statute punctuation marks should be left out of consideration.
Nothing much we think, turns the comma, as it seems I grammatically more correct to take the adjectival clause as qualifying " law ".
Having 'regard to the words anything contained" and the preposition "in" used after the disjunctive "or", the qualifying clause cannot reach back to the words " Bar Councils Act ".
But, whichever way we take it, it must be admitted that, in framing the non obstante clause, the draftsman had primarily in, mind those Provisions which stood in the way of an Advocate not enrolled in any particular High Court practising in that Court.
It does not, however, necessarily follow that section 2 is concerned only with the right of Advocates of the Supreme Court to practise in the High Courts in which they are not enrolled.
The true scope of the enacting clause must, as we have observed, be determined a fair reading of the words used in their natural and ordinary meaning, and in the present case, there is not much room for doubt the point.
The words " every Advocate " and " whether or not he is an Advocate of that High Court" make it plain that the section was designed to apply to the Advo cates of the Supreme Court not only in relation.
to the High Courts of which they are not Advocates but also in relation to those High Courts in which they have been already enrolled.
The learned Judges below dismissed the words " whether or not etc.
" with the remark that " they are not very apposite ",,as " no one who is an Advocate of a particular High Court requires to be an Advocate of the Supreme Court in order to practise in that Court".
While it may be true to say that section 2 does not give Advocates of many of the High Courts any additional right 24 in relation to their own Courts, it would, according to the petitioner 's contention, give at least to the Advocates of the Calcutta and Bombay High Courts some additional right in the Original Side of those Courts, and that may well have been the purpose of using those words.
It is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage, if they can have appropriate application in circumstances conceivably within the contemplation of the statute.
Nor can we read the non obstante clause as specifically repealing only the particular provisions which the learned Judges below have been at pains to pick out from the Bar Councils Act and the Original Side Rules of the Calcutta and Bombay High Courts.
If, as we, have pointed out, the enacting part of section 2 covers all Advocates of the Supreme Court, the non obstante clause can reasonably be read as overriding " anything contained" in any relevant existing law which is inconsistent with the new enactment, although the draftsman appears to have had primarily in his mind a particular type of law as conflicting with the new Act.
The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously; for, even apart from such clause, a later law abrogates earlier laws clearly inconsistent with it.
Posteriores leges priores contrarias abrogant (Broome 's Legal Maxims, 10th Edn., p. 347).
Here, section 2 entitles every Advocate of the Supreme Court as of right to practise in any High Court in India.
The phrase " entitled as of right " has evidently been adopted from the Bar Councils, Act, and we have already indicated our view that; the word "Practise as applied to a legal practitioner in,,, India includes, in the absence of any limiting or restrictive; context, both the functions of acting and pleading.
The phrase " entitled as of right to practise " is an emphatic affirmation of a right to plead, and to act independently,of the will or discretion of any other person.
Could it be said that sections 9 (4)and 14 (3) 25 of the Bar Councils Act are consistent with the existence of such a right ? As we have seen already, section 9 (4) preserves the powers of the High Courts at Calcutta and Bombay, among other things, " to grant or refuse, as they think fit " the applications of persons to practise in those High Courts in the exercise of their original jurisdiction How could a person be said to be entitled as of right to practise in a High Court if that Court has unfettered power to reject his application to practise an important side of its jurisdiction ? Similarly, bow Could a person be said to be entitled as of right to pleadin a High Court if that Court has the power to frame a rule which pre cludes him from pleading in the original jurisdiction of ;that Court unless he is instructed by an Attorney? Obviously, sections 9 (4) and 14 (3) of the Bar Councils Act and section 2 of the new Act entitling an Advocate of the. Supreme Court as of right to practise in any High Court cannot stand together.
Whether by force of the non obstante clause liberally construed as indicated above or of the wellestablished maxim of construction already referred to, the new Act must have the effect of abrogating the powers reserved and continued in the High Courts by the aforesaid provisions of the Bar Councils Act.
We cannot, therefore, agree with the learned Judges below that the said two provisions have not been superseded or repealed by section 2.
As we have already observed, if such reservations bad also been inserted in the new Act, the analogy with section 14 (1) (a) of the Bar Councils Act would have been complete and the petitioner as an Advocate of the Supreme Court could be prevented by rules made in appropriate terms from acting the Original Side of the Calcutta and the Bombay High Courts.
But, in the absence of such reservations in the new Act, his claim in these proceedings must succeed.
It has been said in the course of the argument that, notwithstanding the absence of such reservations in the new Act, it must be assumed that the Advocates of the Suprme Court have become entitled to practise 26 in any High Court only subject to the rules and regulations of that Court or, as the High Court put it " section 2 does not confer Ian uncharted freedom the Advocates of the Supreme Court to practise in any High Court in any way they like, but only puts them, in each different High Court, a par with the; Advocates of that Court, where they must submit to the same terms and conditions as bind those Advocates".
Otherwise, it was said, the Supreme Court Advocates would be "let loose" to practise in all Courts freed of all obligations to observe the rule and regulations of those Courts and the result would be confusion and chaos.
Therefore, it was urged, the rules of the Calcutta and Bombay High Courts, which preclude Advocates of those Courts from acting the Original Side of their jurisdiction or from pleading without the intervention of an Attorney, are binding upon Supreme Court Advocates as well.
We see no force in the argument which seems to proceed a misconception.
The right of an Advocate to practise, as we have seen, normally Comprises the exercise of his two fold function ' of acting and pleading without the intervention of anybody else.
Any rule or condition that prevents him from exercising one of those functions is plainly a cutting down of his right to practise and, affecting as it does the sub stance of his right, is in its operation, quite unlike the rules and conditions of practice under which all Advocates normally carry their business in courts.
No one suggests that a Supreme Court Advocate is, by becoming entitled to practise in the High Courts, freed from all.
obligation to conform to the ruler, of practice and regulations as, to costume and Such other matters, according to which the profession of law must be exercised in the various High Courts.
There is a vital distinction between such rules and regulations and the rules which seek to out down the sub stance of an Advocate 's right to act and to plead by excluding him from the exercise of the one or the other of those two functions.
The Bar Councils Act recognises this distinction by expressly reserving the 27 power of the High Courts of Calcutta and Bombay to exclude or impose restrictions upon the right of Advocates to plead and to act the Original Side, whereas no similar reservation has been considered necessary in respect of the power to make rules and regulations of the former type, because they were not regarded as derogating from the substance of the statutory right to practise.
Suppose, for instance, the Calcutta, High Court made a rule that no person other than those mentioned in Rule 2 (1), Chapter I of the Original Side Rules (i.e., practising Barristers in England, N. Ireland, etc.) will be entitled to appear and plead its Original Side, could it reasonably be suggested that such a rule was only a matter of "internal administration" and, as such, would bind all Advocates practising in that Court even apart, from section 9 (4) ? Any rules which prevent an Advocate from acting the Original Side or appearing that side without the intervention of an Attorney constitute a serious invasion of his statutory right to practise, and unless the power to make such rules is reserved in the statute which confers the right they cannot prevail against that right.
Reference was also made in this connection to the difficulty of exercising disciplinary control over the Supreme Court Advocates practising in the High Courts in which they are not enrolled but such difficulty, if any, may arise under both the interpretations contended for before us.
It is not denied that a Supreme Court Advocate is entitled to, appear and plead and act the Appellate Side of all the High Courts and the question as to how disciplinary jurisdiction is to be exercised over him in relation to his activities the Original Side will have to be determined the same lines as in relation to his activities the Appellate Side and the possibility of any such difficulty arising cannot be more of an objection to the one construction than to the other.
There was much argument before us as to the ob ject which Parliament had in view in passing, the; new, Act, each side suggesting an object which would 28 support the construction which it sought to place upon section 2.
Each side relied upon the "statement of objects and reasons" annexed to the Bill in support of its own contentions.
Reference was also made to speeches made the floor of the House by members during the debate the Bill.
Our attention was also called to the form of the Bill as originally introduced in the House and its amendment by omitting part (a) of the proviso to clause (2) thereof.
As regards the speeches made by the members of the House in the course of the debate, this Court has recently held that they are not admissible as extrinsic aids to the interpretation of statutory provisions: The State of Travancore Cochin & Another vs The Bombay Co. Ltd. etc.(1).
As regards the propriety of the reference to the statement of objects and reasons, it must be remembered that it seeks only to explain what reasons induced the mover to introduce the Bill in the House and what objects he sought to achieve.
But those objects and reasons may or may not correspond to the objective which the majority of members had in view when they passed it into law.
The Bill may have undergone radical changes during its passage through the House or Houses, and there is no guarantee that the reasons which led to its introduction and the objects thereby sought to be achieved have remained the same throughout till the Bill emerges from the House as an Act of the Legislature for they do not form part,of the Bill and are not voted upon by the members.
We, therefore, consider that the statement of objectsand reasons appended to the Bill should be, ruled out as an aid to the construction of a statute.
The omission of part (a) of the proviso to clause (2) of the Bill seems to us to stand no higher footing.
It sought to exclude from the purview of the Bill the right of an Advocate of the Supreme Court to plead or to act in any, High Court in the exercise of its original jurisdiction,.
Its omissions was strongly relied by the petitioner as indicating the intension of (1) ; 29 Parliament that the right of a Supreme Court Advocate to plead and to act should prevail also the Original Side of a High Court.
It was urged that acceptance or rejection of amendments to a Bill in the course of Parliamentary proceedings forms part of the pre enactment history of a statute and as such might throw valuable light the intention of the legislature when the language used in the statute admitted of more than one construction.
We are unable to assent to this proposition.
The reason why a particular amendment was proposed or 'accepted or rejected is often a matter of controversy, as it happened to be in this case, and without the speeches bearing upon the motion, it cannot be ascertained with any reasonable degree of certainty.
And where the legislature happens to be bicameral, the second Chamber may or may not have known of such reason when it dealt with the measure.
We hold accordingly that all the three forms of extrinsic aid sought to be resorted to by the parties in this case must be excluded from consideration in ascertaining the true object and intention of the Legislature.
In the result, treating this proceeding as an appeal from the judgment of the High Court, we set aside the order of that Court and direct the respondents to receive any warrant of authority which the first; petitioner may produce from the legal representative of the second petitioner who is reported to have died in the course of the proceeding.
We make no order as to costs.
MUKHERJEA J. This case has been argued before us with elaborate fulness by the 'petitioner No. 1, Mr. Aswini Kumar Ghosh, who appeared in person, as well as by a number of eminent counsel representing the Barristers ' and Advocates ' Associations in the three principal High Courts in India.
Having given their learned arguments the best consideration that I am capable of, I have come to the conclusion that this application cannot succeed.
30 The matter in controversy is a very short one.
The petitioner No. I is an Advocate of the Calcutta High Court entitled to practise both its Original and Appellate Sides.
This means, that he can both plead and act the Appellate Side of the Court and plead only its Original Side.
Mr. Ghosh later got himself enrolled as an Advocate of the Supreme Court and after the passing of the Supreme Court Advocates (Practice in High Courts) Act, 1951, he asserted his right, the strength of the provision of that enactment, to " or act" also the Original Side of the Calcutta High Court.
He actually filed "a warrant of power and appearance" behalf of the petitioner No. 2 in a suit pending in the Original Side of that Court in which the latter figures 'as the defendant.
The warrant was returned to him by the Suit Registrar, Original Side, with an endorsement it, that it must be filed by an Attorney of the Court under the rules and orders of the Original Side of the High Court, and not by an Advocate.
Being aggrieved by this refusal, the petitioners presented an application before the Calcutta High Court under article 226 of the Constitution, complaining of infraction of the right conferred upon the first petitioner by Act XVIII of 1951 and praying for an appropriate writ or order to enforce the same.
A rule was granted this application by Bose J. sitting singly; and eventually, having regard to the importance of the question involved in the application, the rule was heard by a Special Bench of three Judges, con sisting of Trevor Harries C.J. and Chakravartti and Banerjee JJ.
By the judgment, which was delivered by Mr. Justice Chakravartti 21st December, 1951, the rule was discharged and the application of the petitioner was dismissed.
The petitioners have now come up to this court a substantive petition under article 32 of the Constitution and have also prayed for special leave to appeal against the judgment of the Calcutta High Court.
We admitted the petition and issued notices to the Attorney General of India as well as to the Barristers ' and Advocates "Associations in those High Courts in India which are likely, 31 to be affected by the decision in the case.
A number of them, as said above, appeared before us through counsel and we had also the advantage of hearing the learned Attorney General the points that were raised in course of hearing.
The sole point for consideration in this case is, whether the petitioner No. 1, who is an Advocate of the Supreme Court ' can, in addition to exercising his right of pleading the Original Side of the Calcutta High Court which is not challenged by anybody, claim, by virtue of the provision of section 2 of Act XVIII of 1951, the right to "act" the Original Side of that Court, although according to the rules framed under the Letters Patent an Advocate of the Calcutta High Court may not appear in the Original Side unless instructed by an Attorney: (vide Chapter 1, Rule 37, of the Original Side Rules).
To decide this question we will have to investigate the precise extent of the right that has been conferred upon the Supreme Court Advocates by section 2 of the Act mentioned above and ascertain what exactly is the meaning of the word "practise '. ' as used in that section '.
The Act is a very short one and consists only of two sections.
The first section gives the name and description of the Act which is intituled "The Supreme Court Advocates (Practice in High Courts) Act" and the object, as stated at the, outset before the enacting clause commences, is to "authorise Advocates of the Supreme Court to practise as of right in any High Court".
The entire provision of the Act is contained in section 2 which runs thus "Notwithstanding anything contained in the (XXXVIII of 1926) or in any other law regulating the conditions subject to which a person not entered in the roll of Advocates of a High Court, may be permitted to practise in that High Court every Advocate of the Supreme Court shall be entitled as of right to ' practise in any High Court whether or not he is an Advocate of that High Court".
32 Upon this,aproviso is engrafted to the following effect that"nothing in this section shall be deemed to entitle any person merely by reason of his being an Advocate of the Supreme Court to practise in a High Court of which he was at any time a Judge, if he had given an undertaking not to practise therein after ceasing to hold office as such Judge".
Then follows a short explanation which simply lays down that the expression "High Court" in the section includes the Court of a Judicial Commissioner and the statute ends there.
It may be mentioned at the outset that the Supreme Court was established in the year 1950 and article 145(1) of the Constitution empowered the Court to make rules "for regulating generally the practice and procedure of the court" including (a) rules as to the persons practising before the Court '.
The Supreme Court Advocates were not entitled to practise as of right in any of the High Courts/in India.
The rules made by the different High Courts impose considerable restrictions and disabilities upon the Advocates of other High Courts who wanted to appear and conduct cases before them.
The power to grant or withhold permission to these outside Advocates lay for the most part in the exercise of an unfettered discretion by the Chief Justice of the Court, and that too in individual cases, and instances were not rare of such permission being refused to lawyers of acknowledged eminence belonging to other High Courts.
After the establishment of the Supreme Court in India and with the prospect of a united Bar looming in the minds of the people, this was felt to be extremely unjust and anomalous.
It was primarily to remedy this defect in the existing law, that this particular enactment was passed by the legislature and the legislative purpose, as is disclosed in the language of the enactment, is to allow the Supreme Court Advocates access to the other High Courts in India as of right, untrammelled by any restriction or condition that the High Courts themselves might lay down in respect to the "Outside 33 Advocates.
So far there is little room for any controversy.
The dispute centers round the point as to the extent of right that the legislature conferred upon the Supreme Court Advocates in achieving this legislative purpose.
The question is, what meaning is to be attributed to the word "practise" as used in the section ? Mr. Ghosh argues that the word "practise" in its ordinary and literal sense would mean the right to appear, plead and to act 'as well; and it is an established rule of construction that a literal interpreta tion should not be departed from unless there are adequate grounds for such departure.
It is said next that the literal meaning of the word "practise" cannot be out down or controlled in any way by the language of the opening clause in section 2 of the Act; and that clause which maybe described as a non obstante clause is not confined in its operation to removal of the disabling provisions affecting those whose names are not entered as Advocates the roll of a particular High Court, but has the effect of excluding all the provisions of the Bar Councils Act for purposes of this enactment.
It is further argued that the words "whether or not he is an Advocate of that High Court" occurring in section 2 unmistakably indicate that the legislature had not in mind the removal of disabilities attaching to outside Advocates merely, but that it intended to confer certain privileges domestic Advocates as well who happened to be enrolled as Advocates of the Supreme Court.
All these matters require to be examined carefully.
The word "practise" when used with reference to a profession means "to follow, pursue, work at, or exercise such profession".
The profession Of an Advocate may contemplate both acting and pleading; under certain circumstances it may mean pleading alone without acting, but it can never mean acting simply, for those who are entitled to act only and have no right to plead do not come within the description of Advocates at all.
There are other classes of nonAdvocate lawyers who like Solicitors and Agents can 34 act only but cannot plead, and to the carrying of their profession also the same expression practise" is applied.
What is to be remembered in this connection is that the profession of an Advocate can be carried only in a court of law and within the framework of the rules and regulations that obtain in such court.
The word "practise" when used with reference ,to an Advocate is an elastic expression, having no rigid or fixed connotation and the precise ambit of its contents can be ascertained only by reference to the rules of the particular forum in which the profession is exercised.
Thus in the Supreme Court Rules the expression "Advocate" has been defined to mean "a person entitled to appear and plead before the Supreme Court".
He has no right of acting at all.
In Order IV, Rule 31, of the Rules, this right of an Advocate to 'appear and plead has been spoken of as the right of "practising"; while in the rule that follows, the function of an Agent, who can only act and not plead, has also been spoken of as "practice" before the Court.
In the Bar Councils Act the right of practice as an Advocate has been defined in section 14 (1) which lays down that "an Advocate shall be entitled as of right to practise (a) subject to the provisions of subsection (4) of section 9, in the High Court of which he is an Advocate".
The word "practise" has apparently been used here in the general sense of both pleading and acting and these rights have been limited by and made subject to the rules which the High Courts of Calcutta and Bombay may make, determining the persons who shall be entitled to plead and to act in these High Courts in the exercise of their original jurisdiction.
Sections 9 (4) and 14 (3) of the Bar Councils Act expressly reserve to the Calcutta and the Bombay High Courts the power to make rules in this respect and under the rules framed by them an Advocate is not permitted to appear the Original Side unless he is instructed by an Attorney 35 The words "entitled to practise as of right" which occur in section 14 (1) mentioned above have also been used in other parts of the Bar Councils Act, to wit, in sections 4 (2), 5 (1) and 8 (1) of the Act; but the word "practise" in all these provisions does not mean pleading find acting in an unlimited sense.
It connotes the same rights and the same limitations which are prescribed in section 14 of the Act.
The same expression has been used in section 2 of the Supreme Court Advocates Act apparently in the same sense and with the same implications and it cannot be argued that it connotes an unrestricted right of pleading and acting because the reservations mentioned in section 14 (1) of the Bar Councils Act have not been repeated there.
Mr. Ghosh has in this connection drawn our attention to two reported cases, one of which is a pronouncement of the Patna High Court and the other of the Madras High Court.
In the Patna case(1) the question &rose as to whether an Advocate or Vakil whose name appeared the roll of any High Court could "act" behalf of his client by presenting an application for review of a judgment in a case which was tried by a court subordinate to the High Court.
The question was answered in the affirmative and reliance was placed upon section 4 of the which lays down that "an Advocate or Vakil enrolled any High Court 'shall be entitled to practise in all courts subordinate to the court the roll of which he is entered".
This case, it is to be noted, deals with Advocates ' right to practise in subordinate courts where no distinction at all exists between pleading and acting.
Consequently, the word "practise" in this context does include both pleading and acting.
In the Madras case(1) the point for consideration was, whether an Advocate enrolled in the High Court of Madras 'under the was entitled not only to appear and plead (1) Laurentius Ekka vs Dhuki, Pat 766.
(2) In re the Powers of the Advocates, [1928] I.L.R.52 Mad. 92, 36 but also to "act" in the insolvency jurisdiction of the court, in spite of the provision in Rule 128 of the Insolvency Rules of the High Court, which gave such right only to the Attorneys.
It was held that the Advocate had the right to "act" by reason of the provision contained in section 14 (1) of the Bar Councils Act which entitled an Advocate to practise as of right in the High Court in which he is an Advocate; and because so far as the Madras High Court was concerned the Bar Councils Act made no distinction between different jurisdictions of the court and did not save the powers of the court to frame rules in respect of the original and insolvency jurisdictions.
In these circumstances, a rule which cut down the right conferred by sections 8 and 14 of the Bar Councils Act would be deemed to be repealed under section 19 (2) of the Act as being repugnant to its provisions.
It was expressly stated in the judgment that the position was different in regard to the Bombay and Calcutta High Courts and so far as these courts were concerned, their powers were expressly saved by the Bar Councils Act.
This decision clearly shows that the 'expression " practise" would not include "acting" if with regard to particular jurisdictions of a High Court there are valid rules to the contrary.
The question for our consideration really is, what exactly is the position of a Supreme Court Advocate who wants to avail himself of the right of practising in any High Court in India in terms of section 2 of the Supreme Court Advocates Act? Is he to exercise the right only as a Supreme Court Advocate and in accordance with the rules which the Supreme Court itself has laid down in this respect, or is his position, when he appears before a High Court, the same as that of an Advocate enrolled in the said court and he has the same rights and disabilities which attach to such persons under its rules? The only other alternative that is or can be suggested and has been put forward behalf of the petitioner is that he is not ' fettered by any rules either of the Supreme Court or of the particular High Courtr in,which he appears; 37 and as the extent of his right depends upon the language of the section itself, the legislature by using the word "practise" has conferred upon him the righ of both pleading and acting in any High Court he chooses, irrespective of the rules of practice which obtain in such court.
The first view does not appear to me to be tenable. 'I If it is held, that what the section contemplates is that a Supreme Court Advocate in exercising his right of practice in any High Court should be governed by the Supreme Court Rules, the Act itself would be altogether unworkable.
It is laid down in Order IV, Rule 12, of the Supreme Court Rules that "no person shall appear as Advocate in any case unless he is instructed by an Agent.
By "Agent" is meant an Agent of the Supreme Court and under no provision of law is such Agent entitled to act in any High Court in India.
The result, therefore, is that if the Supreme Court Rules are applied, no Advocate would be entitled to appear in any High Court at all.
It cannot be argued that even though the rules of the Supreme Court may not be strictly applicable, the intention of the legislature is that a Supreme Court Advocate in appearing before a High Court either the Original or the Appellate Side shall have only the right of pleading and he has to be instructed by an Attorney or a local Advocate who is competent to act.
Whatever the merits of this view might otherwise be, the language of the section does not at all warrant such a construction and it cannot seriously be suggested that the word " practise ",.must in all cases be confined to pleading only.
The result of such a construction would be to extend the dual system which is at present confined to the Original Sides of the Calcutta and the Bombay High Courts to all the High Courts in India, in all their jurisdictions and to the subordinate courts as well a possibility which the legislature could never have contemplated.
To me it seems that when section 2 speaks of a Supreme Court Advocate being entitled as of right to practise in any High Court, what it actually means is 38 that he would, be clothed by reason of this statutory provision with all the rights which are enjoyed by an Advocate of that Court and his right to plead or to act would depend upon.
the provisions of the Bar Councils Act and the rules validly framed by the said Court, subject to this that no rule or provision of law would be binding, which would affect in any way his statutory right to practise in that Court solely by reason of his being enrolled as an Advocate of the Supreme Court.
It is suggested that if this was the intention of the legislature, nothing could have been easier for it than to state explicitly that a Supreme Court Advocate would have the right to practise in any High Court in the same way as an Advocate of that Court.
In my opinion, that is the implication of the general word It practise " that has been used.
As said already, the practice of an Advocate must always have reference to a court and it must imply the carrying of the profession according to the rules which.
are binding that court, except to the extent that the rules themselves are invalidated expressly or by necessary implication.
If the legislature had expressly stated that an Advocate qualified under section 2 of the Act would have the right of both pleading and acting in any High Court in India or if that was the clear intendment.
and implication of the language used, any rule conflicting with that provision could certainly have been held to be invalid; but I am unable to say that the use of the word " practise " which has only a general import, by itself, would have that effect.
Looked at from this standpoint, the third view indicated above, which has been pressed vehemently behalf of the petitioner, cannot certainly be supported.
So long as the rules relating to pleading and acting in particular jurisdictions of specified High Courts are allowed to remain valid and binding, no intention can be imputed to the legislature, without clear words to that effect, of abrogating these rules with regard to the few persons who happen to be enrolled as Advocatess of the Supreme Court.
Far 39 from achieving uniformity in any sense of the word, such step would lead to serious anomaly and practical difficulties of an enormous character.
the original jurisdictions of the Calcutta and the Bombay High Courts, where the dual system subsists, there are elaborate rules regarding the functions of the Solicitors who alone are competent to act that side, both in 'relation to the courts and to the litigants.
The whole procedure is of a different type, dissimilar in many respects to that which is laid down in the Civil Procedure Code.
It would be difficult, if not impossible, for an Advocate of the Supreme Court, who chooses to act the Original Side of the Calcutta or the Bombay High Court, to fit himself within the framework of these rules.
He cannot possibly carry unless a fresh set of rules is prepared and the framing of new rules, which must exist side by side with the old rules, would lead to further complications and diversities.
The position would certainly have been understandable if it could be held that the legislature wanted to do away with the dual system altogether and introduce one set of rules which would apply uniformly to all classes of lawyers.
Speaking for myself, I would consider that to be an extremely desirable change; but I look in vain for expression of any such legislative intent either in the enactment itself or even in its historical background.
The object of the legislation is quite simple.
It is only to allow Advocates of the Supreme Court the right to practise in all the High Courts in India irrespective of the rules framed by them imposing restrictions the right of Advocates whose names do not appear their rolls.
From the mere use of the word it practise ", the connotation of which is not at all definite, I am unable to hold that it was the intention of the legislature to introduce such sweeping changes in the existing rules which the acceptance of this view would imply.
This leads me to an examination of the other parts of section 2 of the Act to discover, what light, if any, they throw upon the present question.
40 It is one of the settled rules of construction that to ascertain the legislative intent, all the constituent parts of a statute are to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself.
Mr. Justice Chakravartti of the Calcutta High Court laid very great stress the opening clause of section 2 of the Act which excludes the operation of certain statutory provisions, and this negative part of the section constitutes, according to the learned Judge, the measure and criterion of the right which the positive part formulates.
The first question is, to what extent the provisions of any existing law have been eliminated by the opening clause of section 2 The language of the clause is as follows: " Notwithstanding anything contained in the Bar Councils Act (XXXVIII of 1926), or in any other law regulating the conditions subject to which a person not entered in the roll of Advocates of a High Court may be permitted to practise in that High Court. . . . ." Mr. Justice Chakravartti is of opinion that this clause purports to remove all those provisions of the Bar Councils Act or of any other law which imposed restrictions upon persons not enrolled as Advocates of a particular court in the matter of practising in that court.
The exclusion is to this extent and no further; and consequently all the other provisions contained in the Bar Councils Act or other statutes which lay down the conditions 'under which an Ad vocate enrolled in a High Court is entitled to practise in the Original Side of that Court, stand unaffected by that clause.
If these provisions remain valid and effective, it is quite reasonable to hold that the word "practise " in the section must mean " practise " in accordance with these rules and not in supersession of them.
The contention of Mr. Ghosh is that a proper construction of the language of the claue the whole of the Bar Councils Act and not merely those provisions in it, which relate to disabilities attaching to 41 Advocates of other High Courts, must be deemed to be eliminated, so that the right of practising that is conferred by the section is to be exercised without the restrictions or limitations flowing from any of the provisions of the Bar Councils Act.
In support of his contention that the whole of the Bar Councils Act is excluded by the opening clause, Mr. Ghosh lays great stress a comma, which separated the Bar Councils Act and the figures and words that follow, from the expression " or in any other law " which comes immediately after that.
He says further that under the ordinary rules of interpretation the adjectival phrase " regarding the conditions etc." should be taken to apply to the word or phrase immediately preceding it and not to the remoter antecedent term or expression.
These arguments, though they have an air of plausibility about them, do not impress me much, Punctuation is after all a minor element in the construction of a statute, and very little attention is paid to it by English, courts.
Cockburn C.J. said.
in Stephenson vs Taylor (1) : " the Parliament Roll there is no punctuation and we therefore are not bound by that in the printed copies".
It seems, however, that in the Vellum copies printed since 1850 there are some cases of punctuation, and when they occur they can be looked upon as a sort of contemporanea expositio(2).
When a statute is carefully punctuated and there is doubt about its meaning, a weight should undoubtedly be given to the punctuation(1).
I need not deny that punctuation may have its uses in some cases, but it cannot certainly be regarded as a controlling element and cannot be allowed to control the plain meaning of a text(4).
Similarly, although a relative or a qualifying phrase is normally taken with the immediately.
preceding term or expression, yet this rule has got to be discarded if it is against common sense and natural (i) (i861) 1 B. & section page 101.
(2) See Craies Statute Law, page 185.
(3) Vide Crawford Statutory Construction, Page 343.
(4) lbid.
42 meaning of the words and the expressions used.
I find considerable force in the opinion expressed by Chakravartti J. that in the present case the effect.
of the position of the comma or the particular array of ,words in the sentence has been completely neutralised I by the use of the word " other " occurring in the #phrase " or in any other law ".
The result is, as the learned Judge has said, that the Bar Councils Act has been posited as an alternative to other laws and both have been subjected to the qualification contained in the qualifying clause.
Assuming, however, for argument 's sake that Mr. Ghosh is right and that the whole of the Bar Councils Act is eliminated by the opening clause of the section, I do not think that even then it really improves his position.
The Bar Councils Act itself does not make any provision relating to the rights of pleading and acting in the Original Side of any High Court.
Sections 9(4) and 14(3) of the Act save only the rights of the High Courts of Calcutta and Bombay to make rules in relation thereto ; and these rules are made by these courts in the exercise of their powers under the Letters Patent.
Section 19(2) of the Bar Councils Act lays down as follows: " When sections 8 to 16 come into force in respect of any High Court of Judicature established by Letters Patent, this Act shall have effect in respect of such Court notwithstanding anything contained in such Letters Patent, and such Letters Patent shall, in so far as they are inconsistent with this Act or any rules made there under, be deemed to have been repealed.
" If the entire Bar Councils Act is excluded for purposes of section 2 of Act XVIII of 1951, the rules framed by the High Courts of Calcutta and Bombay under the Letters Patent would remain valid and effective of their own force even without the saving provision contained in the above mentioned section of the Bar Councils Act, and section 19(2) of the Act being out of the picture, the Letters Patent would 43 also remain fully alive.
The result will be that Rule 37, Chapter I, of the Original Side Rules of the Calcutta High Court or Rule 40(2) of Chapter II of the Bombay High Court Rules, under which no Advocate can appear in the Original Side of these courts unless instructed by an Attorney, would not come within the purview of the opening clause of Section 2, as they do not relate to matters regulating the conditions of outside Advocates.
Rule 6, Chapter I, of the Bombay High Court Rules, to which our attention was drawn by the learned Attorney General, lays down that an Advocate of any other High Court may appear in a particular case, with the permission of the Chief Justice, the Original Side of the Court, provided he is instructed by an Attorney, and an Advocate of the Bombay High Court appears along with him.
In my opinion, the whole of this provision must be deemed to be invalid for purposes of section 2 of Act XVIII of 1951, and a Supreme Court Advocate,, who wants to appear and plead in a case in the Original Side of the Bombay High Court, has neither to take the permission of the Chief Justice nor is it necessary that he should have along with him an Advocate of that court.
He should certainly be instructed by an Attorney, but that is because of the other provisions, which I have already mentioned, and which apply to the Advocates of the Bombay High Court itself.
I would be quite prepared to hold that what has been excluded by the opening clause of section 2 of the Act may not be the exact measure of the new right that the section purports to create.
In my opinion, the section its negative side eliminates so far as the Supreme, Court Advocates are concerned, all disabling provisions existing under any law in regard to persons who are not enrolled as .Advocates of any particular High Court.
the positive Side, the section confers Supreme Court Advocates the statutory privilege of practising as of right, in any High Court in India, no matter whether he is enrolled as an Advocate of that court or not.
44 It is this positive aspect that has been emphasised by the words "whether or not he is an Advocate of that court" which occur at the conclusion of the section.
It may not be strictly correct to say that these words are altogether inappropriate, for the section aims at conferring, though indirectly, ' certain privileges those who are enrolled as Advocates of the particular High Court as well.
Section 9 (4) of the Bar Councils Act lays down: "Nothing in this section or in any other provision of this Act shall be deemed to limit or, in any way affect the powers of the High Courts of Judicature at Fort William in Bengal and at Bombay to prescribe the qualifications to be possessed by persons applying to practise in those High Courts respectively in the exercise of their original jurisdiction or the powers of those High Courts to grant or refuse, as they think fit, any such application (or to prescribe the conditions under which such persons shall be entitled to practise or plead).
" Provisions of this type are to be found in the Rules of both the Bombay and the Calcutta High Courts.
Under Rule 1, Chapter I, of the Calcutta, Original Side Rules, even an Advocate of that court has to make an application for being entitled to appear and plead the Original Side and he can exercise that right only after that permission is granted.
Such rules would have no effect after the passing of Act XVIII of 1951 and an Advocate of the Supreme Court will be entitled to plead in the Original Side of the Calcutta High Court as a matter of right and without complying with any of the formalities that may be prescribed by the rules of that court.
Mr. Justice Chakravartti expressed doubt as to whether an Advocate of the Supreme Court, who presumably is not an Advocate of the Calcutta High Court, can, as such, plead in the Original Side of the Calcutta High Court.
In my opinion, there is no room for doubt this point at all.
He is entitled to appear and plead as a matter of right under the express provision of section 2 of the, Act, 45 Mr. Ghose finally attempts to support his Contention that the intention of the legislature was to confer upon the Supreme Court Advocates the right to plead as well as to act in all High Courts in India by calling in aid three other facts.
It is said first of all that in the statement of objects and reasons which accompanied the original bill, the right to practise was expressly stated to include both pleading and acting.
In the second place it is pointed out that proviso (a) to section 2 which occurred in the original bill and which excluded the right of both pleading and act ing in the Original Side of the High Courts from the operation of section 2 was dropped altogether and the Act was passed without that proviso.
Lastly it is urged that the expression "practise", which has been employed in the existing proviso to the section, obviously means both pleading and acting, and it is against sound rules of construction to attach different meanings to the same word used in, two parts of the same section.
There are weighty pronouncements of English courts as well as of the Judicial Committee of the Privy Council which lay down that in construing a statute all negotiation previous to the Act or the original form of the bill must be dismissed from consideration.
"We cannot interpret the Act" said Lord Halsbury, "by any reference to the bill, nor can we determine its construction by any reference to its original form"(1).
It is not permissible to ascertain the meaning of the word used in an Act by reference to the proceedings in the Legislative Council, and the language of a "Minister of the Crown" in proposing a measure in Parliament which eventually becomes law is inadmissible(2).
In a, Calcutta case the learned Judges refused to look into the statement of objects and reasons accompanying an enactment as an aid to its construction(3).
The (i)Vida Herron V. Rathmins (1802] A.C. 492 at 5o2.
(2)Vida Krishna Ayyangar vs Nellaperumal[1920] 47 I.A 33; Assam.
Railway & Trading Co. Ltd. vs Inland Revenue Commissioners (1935] A.C, 443; Administrator General of Bengal vs Premlal [1895] 12 I.A. 107 (3) Vida Debendra vs Jogendru, A.I.R. 1936 Cal.
46 judicial opinion this point is certainly not quite uniform and there are American decisions to the effect that the general history of a statute, and the various steps leading up to an enactment including amendments or modifications of the original bill and reports of Legislative Committees can be, looked at for ascertaining the intention, of the legislature where it is in doubt; but they hold definitely that the legislative history is inadmissible when there is no obscurity in the meaning of the statute(1).
Even assuming that the latter view is correct, it does not appear to me that the first and the second contentions of the petitioner indicated above are really of any assistance to him.
It is true that in the statement of, objects and reasons which was circulated ' along with the original bill, the word "practise" was said to include both Pleading and acting; but at the same time the original bill did not purport to confer at all upon the Supreme Court Advocates, the ' right either of pleading or of acting in any High Court in the exercise of its original jurisdiction.
This was expressly laid down in the original proviso (a) to section 2 and the concluding portion of the statement of objects and reasons stood thus: "The present bill is intended to achieve such unanimity by providing that every Advocate of the Supreme Court shall be entitled to practise as of right, in any High Court otherwise than its Original Side." Conceding that Mr. Ghosh is entitled to rely the fact that the first; proviso, which excluded the original jurisdiction of the High Courts from the purview of section 2 was subsequently dropped the dropping of the proviso by itself proves nothing.
What the proviso intended was to confine the right of practising which section 2 of the Act conferred Supreme Court ' Advocates exclusively to the appellate jurisdiction of the High Courts.
A Supreme Court Advocate as such was not entitled under the proviso to act or plead in the Original Side of any (1) Vide Crawford Oil statutory Construction page 383 47 High Court in India.
It is to be noted that this prohi bition had nothing to do with the dual system that exists in the original jurisdiction of the Calcutta and the Bombay High Courts and it was totally unconnected with the provisions of the Bar Councils Act, or the rules of the Calcutta and the Bombay High it Courts in relation thereto.
the other hand, if, as I have already stated, section 2 of the Act purported to confer the Supreme Court Advocates the right of practice in the different High Courts in India in the same way as the Advocates enrolled in those, courts are entitled to do, the original proviso (a) purported to cut down that right to a considerable extent.
Under this proviso the, Supreme Court Advocates were denied the right of pleading the Original Side of the Calcutta and the Bombay High Courts and they could neither act nor plead the Original Side of the Madras High Court, although they would have those rights under the Bar Councils Act.
The dropping of the proviso might mean nothing else than this that this restriction was withdrawn and the rights created by the section without the proviso stood intact.
Be that as it may, it is, in my opinion, a most risky thing to attempt to construe the meaning of a word in a statute with the aid of a nonexistent provision.
We do not know the reasons why the legislature deleted this clause and it is not permissible for us to speculate these matters.
A reference to the legislative debates or the speeches that were actually delivered in the floor of the House is, in my opinion, inadmissible to ascertain the meaning of the words used in the enactment.
The use of the word "practise" in the, proviso to section 2, as it now stands, is also a matter of no im portance.
Section 2 confers certain additional rights upon the Supreme Court Advocates and they have the right of practising in all the High Courts in India subject, as I have said, to the rules and regulations binding the Advocates in each one of them.
The proviso makes an exception to this rule, and in case 48 an Advocate of an particular High Court, who became a Judge of that court, gave an undertaking at the time when he assumed his office that he would not practise in that court after he ceased to be a Judge, the provision in the section could not be availed of by him in the face of his undertaking.
This is the plain meaning of the proviso.
Apparently the legislature was not in the least concerned when it enacted this proviso with the extent of right which such Advocate possessed when be became a Judge; and the extent of the right would certainly depend upon the rules and regulations of the High Court in which he carried his practice.
My conclusion is that the view taken by the Calcutta High Court is the right and proper view to take and this application must fail.
I make no order as to costs.
DAS J.
The present proceedings before us have been initiated a petition by two petitioners.
The first petitioner is 'Sri Aswini ' Kumar Ghosh who is an advocate of the Calcutta High Court enrolled the Original Side as well as the Appellate Side of that Court.
As such advocate of the Calcutta High Court, he is entitled to act and plead the Appellate Side, but only to plead the Original Side.
He has since been enrolled also in this Court as an advocate which term is defined in Order ' 1, rule 2, of the Rules of this Court as meaning a person entitled to appear and plead before the Supreme Court.
May 26, 1951, petitioner Aswini Kumar Ghosh served notices the Registrars of the Original Side as well as of the Appellate Side of the Calcutta High Court intimating that, in exercise of the right conferred by the Supreme Court Advocates (Practice in the High Courts) Act, 1951, he, would thenceforth "practise, i.e., act and plead", in the said High Court at Calcutta also as a Supreme Court advocate.
July 14, 1951, petitioner Aswini Kumar Ghosh, as a Supreme Court advocate, tendered what he calls a warrant of appearance under rule 58 of the Indian Companies Rules framed by the Calcutta High "Court in the matter of 49 a winding up petition regarding a company.
That "warrant of appearance" was returned by the Registrar evidently because rule 58 requires a person who intends to appear the hearing of the winding up petition to leave with or sent to the petitioner or to his attorney a notice of such intention signed 'by him or by his attorney" and does not authorise the filing of a notice signed by an advocate.
The second petitioner is one Sri Jnanendra Nath Chatterjee who is the defendant in Suit No. 2270 of 1951 pending the Original Side of the Calcutta High Court.
July 18, 1951, petitioner Jnanendra Nath Chatterjee as defendant in the said Suit No. 2770 of 1951 executed a "warrant of appearance and power" in the said suit in favour of the petitioner Aswini Kumar Ghosh.
The petitioner Aswini Kumar Ghosh as advocate for the petitioner Jnanendra Nath Chatterjee 'filed the warrant with the Assistant in charge of the Suit Registry Department of the Original Side.
This was, clearly done in purported compliance with the provi sions of Chapter 8, rule 15, of the Original Side Rules.
That rule, however, requires the defendant to enter his appearance to a writ of summons by filing a memorandum in writing containing the name and place of business of the defendant 's attorney or stating that the defendant defends in person and containing his name and place of business.
That rule does not in terms contemplate an advocate acting for a defendant.
It is, therefore, not surprising at all that July 27, '1951, the "warrant of appearance" was returned by the respondent Arabinda Bose, the Assistant in the Suit Registry ]Department of the Original Side of the Calcutta High Court, with the endorsament that "the warrant must be filed by an attorney of this Court under High Court Rules and Orders, Original Side, and not by an Advocate".
The petitioner Jnanendra Nath Chatterjee thereupon entered appearance in person July 30, 1951, and has been defending the suit in person.
The two petitioners, however, moved the Calcutta High Court under article 226 of the Constitution 50 and obtained a Rule calling upon the two respondents Sri Arabinda Bose, the Departmental Assistant, and Sri section N. Banerjee, the Registrar of the Original Side, to show cause why an order or direction in the nature of an appropriate writ should not be issued for the enforcement of the fundamental right of the petitioner Aswini Kumar Ghosh "to practise, i.e., to act and plead the Original Side of this Court", as conferred him by Act XVIII of 1951 and guaranteed by article 19 (1) (g) of the Constitution of India and why consequential orders therein mentioned should not be made.
The Rule was heard by a Special Bench of the Calcutta High Court consisting of Harries C.J. and Chakravartti and Banerjee JJ.
who discharged the Rule December 21, 1961, and dismissed the petition.
As will appear from the judgment of the High Court ' the argument addressed to it "made no reference to the alleged fundamental right and that the petitioner confined his argument to the provisions of the Supreme Court Advocates ( Practice in the High Courts) Act, 1951.
" The powers of the High Court under article 226 not being confined to the enforcement of fundamental rights it was possible for the petitioner to rely the rights under the last mentioned Act.
The petitioners did not apply for or obtain the leave of the High Court to appeal to this Court.
Long after the time fixed by the rules for applying for special, leave to apppal to this Court had expired the petitioners filed the present petition against the same respondents.
The. petition is intituled as an application under articles 22 (1), 32 (1) and (2), 135 and 136 (1) of the Constitution of India.
In the prayer portion of the petition, the petitioners ask for directions, orders or appropriate writs the respondents for the enforcement of their fundamental rights guaranteed under articles 19 (1) (g) and 22 (1) of the Constitution, an order declaring the right of the petitioner Aswini Kumar, Ghosh act behalf of his clients the Original Side of all, High Courts in India including Calcutta, an order upholding the 51 right of the petitioner Jnanendra Nath Chatterjee to be defended in the said suit by the petitioner Aswini Kumar Ghosh and other consequential reliefs.
There is an alternative prayer asking this Court to treat the petition as an application, under article 136, for special leave to appeal against the judgment and order of, the Special, Bench of the Calcutta High Court dismissing the petitioners ' application, under article 226 of the Constitution and for condonation of the delay in presenting the present petition.
At the hearing before us it has not been seriously suggested that the rights of the petitioner Jnanendra Nath Chatterjee, fundamental or otherwise, have in any way been infringed.
Nor was the petition presented before us as one for the enforcement of any fundamental right of the petitioner Aswini Kumar Ghosh guaranteed by article 19 of the Constitution.
What Was pressed before us by the petitioner Aswini Kumar Ghosh, who appeared in, person, was the right said to have been conferred him as an advocate of this Court by section 2 of the Supreme Court Advocates (Practice in the High Courts) Act (Act XVII of 1951) hereinafter in this judgment referred to as "the Act".
In the circumstances the petition has not seriously been presented before us as one under article 32 of the Constitution and it is not necessary for me to express any opinion as to whether a petitioner whose application for enforcement of an alleged fundamental right under article 226 has been rejected by the High Court can maintain an application under article 32 to this Court for the same relief based precisely the same facts and grounds.
The petition, however,. has been presented before us as an application under article 136 of the Constitution for special leave to appeal from the judgment of the Special Bench of the Calcutta High Court.
We have been pressed to proceed with the matter the footing as if special leave to appeal has been given and the delay in the presentation thereof has been condoned by this Court.
I deprecate this suggestion ' for I do not desire to encourage the belief that an intending 52 appellant who has not applied for or obtained, the ,leave of the High Court and who does not say a word by way of explanation in the petition as to why be did not apply to the High Court and as to why there ' has been such delay in applying to this Court should nevertheless get special leave from this Court for the mere asking.
As, however, the matter has been proceeded with as an appeal, I express my views the questions that have been canvassed before us.
There is no dispute that the Act has conferred some new rights the Supreme Court Advocates.
The controversy is as to the ambit and scope of the.
right so conferred and it has centred round the expression "to practise" used in section 2 of the Act.
In order to resolve that controversy we have to ascertain the true meaning of that expression as used in the Act.
The provisions of the Act quite clearly apply to and affect all High Courts in India.
It is, therefore, necessary to bear in mind the status and position of advocates as they prevail in the different High Courts.
The Indian High Courts Act, 1861 (24 & 25 Vic. C. 104) by section I authorised Her Majesty, by Letters Patent, to erect and establish High Courts for the three Presidencies of Bengal, Madras and Bombay.
Section 9 of that statute provided that each of the High Courts to be so established should have and exercise civil, criminal and other jurisdiction, original and appellate, as therein mentioned and all such powers and authority for and in relation to the administration of justice in the presidency for which it is established, "as Her Majesty may by such Letters Patent as aforesaid grant and direct.
" Section 16 of that statute also empowered Her Majesty to establish a High Court in and for any portion of the territories within Her Majesty 's dominions in India, not included within the limits of the local jurisdiction of another High Court.
Pursuant to this authority High Courts were established by Letters Patent at Fort William in Bengal, Madras and Bombay.
Clause 9 of the Letters Patent of each of the three Presidency High 53 Courts authorised and empowered each of the said High Courts: "to approve, admit, and enrol such and so many Advocates, Vakils, and Attorneys as to the said High Court shall seem meet; and such Advocates, Vakils and Attorneys shall be and are here by authorised to appear for the suitors of the said High Court, and to plead or to act, or to plead and act, for the said suitors, according as the said High Court may by its rules and directions determine, and subject to such rules and directions.
Subsequently other, High Courts were established from time to time by Letters Patent at different places, e.g. Allahabad, Patna,, Lahore and Nagpur, and similar power was, by clause 7 of the respective Letters Patent, conferred each of the said High Courts to make similar,rules.
It is well known that each of the High Courts actually framed rules for the admission of advocates, vakils and attorneys.
The High Courts of Calcutta, Madras and Bombay divided their jurisdictions into two broad categories, namely, ,original jurisdiction and appellate jurisdiction, and by their Rules made an 'internal classification of the advocates, vakils and attorneys.
Thus the advocates or vakils enrolled the Appellate Side were empowered "to appear, act and plead" but the advocates enrolled the Original Side were permitted only "to appear and plead", the "acting" the Original Side being reserved for the attorneys for whom a separate roll was maintained.
The, Madras High Court has, however, done away with this internal classification and advocates of that High Court may now appear, act and plead/ the Original Side as well as the Appellate Side.
The Calcutta and Bombay High Courts, however, maintained the distinction.
Chapter I , rule 37, of the Rules of the Original Side of the Cal cutta High Court provides that persons to whom the rules contained in that chapter are applicable may not appear unless instructed by an attorney.
Chapter I. rule 40, of the Rules of the Original Side :of the 54 Bombay High Court is the same lines.
Although the remaining Letters Patent High Courts in India have extraordinary original jurisdiction, both civil and criminal, they did not make any distinction between original and appellate jurisdiction as in Calcutta and Bombay and the advocates enrolled in those High Courts were and are permitted "to appear, act and plead" in all their jurisdictions.
Apart from the several Letters Patent High Courts other High Courts, e.g., the High Courts of Assam and Orissa, and the High Courts of Part B States, also have framed rules of their own for admission of advocates and according to those rules the advocates of all these High Courts can ((appear, act and plead".
The position, therefore, was that, at the date of the Act, all advocates of all High Courts including those of the Appellate Side of Calcutta and Bombay High Courts but excluding only the Original Side advocates of Calcutta and Bombay could "appear, act and plead" in their own High Courts in all jurisdictions but the advocates of the Original Side of those two High Courts could only "appear and plead" the Original Side.
Apart from the bar against acting imposed by the High Courts of Calcutta and Bombay their own Original Side advocates, all the High Courts, by their respective rules, prescribed certain conditions subject to which alone an advocate who was not their rolls could "appear and plead" in such High Courts.
Chapter I, rule 38, of the Original Side of the Calcutta High Court provides as follows: "An Advocate of any other High Court or Chief Court may with the permission of the Chief Justice appear and plead for parties in matters arising in or out of the original jurisdiction, or in or out of appeals therefrom, provided he is a member of the Bar of England or of Northern Ireland, or a member of the Faculty of Advocates in Scotland, or a person entitled to appear and plead the Original Side of the High Court of Judicature at Bombay, and that he is properly instructed by an Attorney " 55 There is also a rule framed under section 15 (b) of the which applies to the Appellate Side of the Calcutta High Court prescribing that an advocate of another High Court can "appear and plead" the Appellate Side of the Calcutta High Court in a particular case or cases only with the previous permission of the Chief Justice.
Reference may in this connection be made to Chapter I, rule 6, of the Bombay Rules applicable to the Original Side and the rule framed under the which applies to the Appellate Side of Bombay High Court and is set out in Schedule II of of the Appellate Side Rules.
There is no dispute that each of the other High Courts have rules in pari materia imposing conditions advocates not its roll in the matter of their appearing and pleading in such High Court.
Thus it is clear that an advocate not the rolls of a particular High Court could not as of right "appear and plead" in that High Court.
He had to satisfy the conditions laid down by that High Court before he could "appear and plead" in that High Court.
It should be particularly noticed that under these rules foreign advocates who satisfied the conditions were permitted only to "appear and plead".
There never was any question or claim of a foreign advocate being permitted to "act" in a High Court of which, he was not an advocate.
The legislature which enacted the Act now under our consideration had full knowledge of the internal classification of the advocates of the Calcutta and Bombay High Courts into Original Side advocates and Appellate Side advocates, the disability of the Original Side advocates of those two High Courts, namely, that they were not permitted "to act" the Original Side and could only ', 'appear and plead", the instruction of an attorney and that the attorneys alone were permitted "to act" that side of those two High Courts.
Further the legislature was well aware of the bar imposed foreign advocates, i.e., advocates not the roll of a High Court in the matter of their appearing and pleading in that High 56 Court and the fact that eminent advocates of one High Court were not, many occasions in the past, given permission "to a ' pear and plead" in another High Court.
The legislature knew that under Order I, rule 2, of the Supreme Court Rules an advocate had been defined as a person entitled "to appear and plead" before the Supreme Court and that Order IV, rule 30, precluded an advocate from acting as agent and an agent as advocate in any circumstances whatsoever.
Finally, the legislature was cognisant of the fact that a Supreme Court advocate was a, foreign advocate in all High Courts other than the one, where he was enrolled and as such was not entitled as of right "to appear and plead" in those High Courts.
With knowledge of all these facts and circumstances the legislature proceeded to enact this Act and, therefore, the provisions of the Act have to be considered in the light of these prevailing circumstances which undoubtedly form the background ' of this enactment and which cannot be overlooked or ignored.
Turning now to the text of the Act, one cannot but be impressed at once with 'the wording of the full title of the Act.
Although there are observations in earlier English cases that the title is not a part of the statute and is, therefore, to be excluded from consideration in construing the statute, it is now settled law that the title of a statute is an important part of the Act and may be referred to for the purpose of ascertaining its general scope and of throwing light its construction, although it cannot override the clear meaning of the enactment.
(See Maxwell the Interpretation of Statutes, 9th Edn.
P. 44 and the cases cited therein).
The full title 'of the Act now under consideration runs thus: "An Act to authorise Advocates of the Supreme Court to practise as of right in any High Court.
" One cannot fail to note the words " as of right and the words " in any High Court " which follow immediately.
Those two sets of words at once convey 57 to my mind that the act is directly and intimately concerned with the disability imposed by a High Court advocates not its roll in the way of their appearing and pleading in such High Court without the permission of the Chief Justice and without satisfying other conditions if any, and that their purpose is to remove and supersede that disability, so far as the Supreme Court advocates are concerned, by authorising them to do so as of right.
The words " as of right " are quite clearly indicative of an independent statutory right as opposed to the conditional right dependent the sweet will of the Chief Justice concerned.
Those words are used byway of antithesis and bring out prominently the object of the Act.
In view of that well known disability which naturally was irksome, those words cannot fail to convey to one 's mind the conviction that the purpose of the Act, as indicated by its title, is to confer the advocates of the Supreme Court a right which was denied to them by the Rules of the High Courts referred to above.
The language in which the title of the Act has been, expressed appears to me to be a good and cogent means of finding out the true meaning and import of the Act, and, as it were, a key to the understanding of it.
The matter, however, does not rest the title of the Act alone and I pass to section 2 of the Act which is expressed in the following terms: " Notwithstanding anything contained in the ' (XXXVIII of 1926), or in any other,law regulating the conditions subject to which a person not entered in the roll of Advocates of a High Court may be permitted to practise in that High Court every Advocate.
of the Supreme Court shall be entitled as of right to practise in any High Court whether or not he is an Advocate of that High Court.
Provided that nothing in this section shall be deemed to entitle 'any person merely by reason of his being all Advocate of the Supreme Court to practise 58 in a High Court of which he was at any time a Judge, if he had given an undertaking not 'to practise therein after ceasing to hold office as such Judge.
" It will be noticed that the main body of the section consists of two parts, namely, a non obstante clause beginning with the words " Notwithstanding anything" and ending with the words "permitted to practise in that High Court " and a positive part beginning with the words " every Advocate of the Supreme Court " and ending with the words " of that High Court.
" To clear the ground it will be useful, at the outset, to ascertain the 'scope and ambit of the non obstante clause.
The controversy this clause has raged round the question whether the adjectival clause, namely, "regulating the conditions subject to which a person not entered in the roll of Advocates of a High Court may be permitted.
to practise in that High Court " governs the words " the " as well as the words "any other law" which immediately precede that clause.
If that clause also attaches to and qualifies the words "the " then there can remain no manner of doubt that the ambit, scope and purpose of the non obstante clause are to supersede, not the whole of the but, only that part of it which regulates the conditions subject to which a person not entered in the roll of Advocates of a High Court may be permitted to practise in that High Court, that is to say, that the supersession of the Indian Bar Councils.
Act is only to the same extent to which that adjectival clause supersedes "any other law".
Conscious that such a construction will run counter to his contention, it has been the endeavour of the petitioner Aswini Kumar Ghosh to keep the adjectival clause separated from the words "".
For this purpose he fastens the comma appearing after the bracket and before the word "or" and contends that the comma indicates that the qualifying clause does not govern the .
59 The High Court has rejected the contention of the petitioner Aswini Kumar Ghosh two grounds.
In the first place it has been said that the comma was no part of the Act.
That the orthodox view of earlier English Judges was that punctuation formed no part of the statute appears quite clearly from the observations of Willes J. in Claydon vs Green(1).
Vigorous expression was given to this view also by Lord Esher, M. R. in Duke of Devonshire vs Connor(1) where he said In an Act of Parliament there are no such things as brackets any more than there are such things as stops.
" This view was also adopted by the Privy Council in the matter of interpretation of Indian statutes as will appear from the observations of Lord Hobhouse in Maharani of Burdwan vs Murtunjoy Singh(1), namely, that " it is an error to rely punctuation in construing Acts of the Legislature.
" Same opinion was expressed by the Privy Council in Pugh vs Ashutosh Sen(4).
If, however, the rule regarding the rejection of punctuation for the purposes of interpretation is to be regarded as of imperfect obligation and punctuation is to be taken at least as contemporanea expositio, it will nevertheless have to be disregarded if it is contrary to the plain meaning of the statute.
If punctuation is without sense or conflicts with the plain meaning of the words, the Court will not allow it to cause a meaning to be placed upon the words which they otherwise would not have.
This leads me to the second ground which mainly the High Court rejected the plea of the petitioner Aswini Kumar Ghosh, namely, that the Word "other" in the phrase "any other law" quite clearly connects the with other laws as alternatives and subjects both to the qualification contained in the adjectival clause.
I find myself in complete (1) at P. 522.
(2) (1890) L.R.Q.13.D 468.
(3) (1886) L.R. 14 I.A. 30 at P. 35.
(4) (1928) L.R. 56 I.A. 93 at p. zoo, 60 agreement with the High Court this point.
If the intention wag that the adjectival clause should not qualify the , then the use of the word "other" was wholly inapposite and unnecessary.
The use of that word 'unmistakably leads to the conclusion that the adjectival clause also qualifles something other than "other law".
If the intention were that the should remain unaffected by the qualifying phrase and should be superseded in toto for the purposes of this Act the legislature would have said "or in any law regulating the conditions etc.
" It would have been yet simpler not to refer to the at all and to drop the adjectival clause and to simply say "Not withstanding anything contained in any law".
In the light of the true meaning of the title of the Act as I have explained above and having regard to the use of the word " other " I have, no hesitation in holding, in agreement with the High Court, that what the non obstante clause intended to exclude or supersede was not the whole of the Indian Bar, Councils Act but to exclude or supersede that Act and any other law only in so far as they or either of them purported to regulate the conditions subject to which a person not entered in the roll of advocates of a High Court might be permitted to practise in that High Court and that the comma, if it may at all be looked at,, must be disregarded as being contrary to this plain meaning of the statute.
Assuming, however, that the qualifying clause does not attach to the words "", that circumstance will, nevertheless, make no difference in the legal position. 'Section 8(1) of the Indian.
Bar Councils A et provides as follows: "No person shall be entitled as of right to practise in auy HighCourt,unless his name is entered in the roll of the advocates of the High Court maintained under this Act: Provided that nothing in this sub section shall apply to any attorney of the High Court.
" 61 Section 14(2) runs thus: "Where rules have been made by any High Court within the meaning of clause (24) of section 3 of the , or in the case of a High Court for which a Bar Council has been constituted under this Act, by such Bar Council under section 15, regulating the conditions subject to which advocates of other High Courts may be permitted to practise in the High Court, such advocates shall no be entitled to practise therein otherwise than subject to such conditions." Section 15(b) authorises the Bar Council, with the previous sanction of the High Court, to make rules to provide for and regulate "the conditions subject to which advocates of other High Courts may be permitted to practise in the High Court".
As already stated, a rule has been framed under this section by the Calcutta Bar Council as well as by the Bombay Bar Council.
These three provisions are the only provisions of the or the rules thereunder which place a bar against an advocate, not the roll of a Hiah Court, from practising in such High Court.
It is interesting to note that the nonobstante clause in section 2 of the Act we are construing is couched in language which has unmistakably been taken from sections 14 (2) and 15 (b).
There can be no question that a supersession of the will supersede those provisions of that Act and the rules thereunder which " 'regulate the conditions subject to which advocates of other High Courts may be permitted to practise in the High Court".
Apart from this I find nothing in the which has any direct bearing section 2 of the Act we are construing or whose supersession is necessary to give effect to it.
It is said that the rules of the Calcutta and Bombay High Courts do prescribe the qualifications to be possessed by persona applying to practise in those Courts and the conditions under which such persons will be entitled to practise and reserve to those Courts the right to grant. ' 62 or refuse any application for enrolment.
It is also pointed out that the rules of the Original Sides of ' those two High Courts do determine the persons who shall respectively plead and act in those High Courts in the exercise of their original jurisdictions.
It is next pointed out that sections 9 (4) and 14 (3) of the preserve these rules and it is contended that a supersession of the in its entirety will do away with sections 9(4) and 14(3) and the protection of those sections having been withdrawn, those rules will con sequently stand abrogated, so as to facilitate the operation of the provisions of section 2 of the Act under review.
I am unable to accept, this argument as sound.
Sections 9(4) and 14(3) do not purport to give any fresh validity to the rules of the Calcutta and Bombay High Courts.
All that those sections do is to declare that nothing in the shall be deemed to limit or affect the powers of those two High Courts which exist in dependently of those two.
sections and flow from their respective Letters Patent.
Therefore, if the whole of the including sections 9(4) and 14(3) stand abrogated such abrogation will not affect the existence or validity of the rules of those High Courts which will, nevertheless, continue in full force the strength of the Letters Patent of those High Courts.
It is clear, therefore, that even if the adjectival clause does not qualify the and if, consequently, the nonobstante clause under review is taken to supersede the whole of the , the effect of such supersession will, for the purposes of section 2, be only to do away with the provisions of sections 8(1) and 14(2) and the rule made under section 16(b) of the in so far as they "regulate the conditions subject to which advocates of other High Courts may be permitted to practise in the High Court" just as it will abrogate all other laws in so far as they regulate those very conditions.
The supersession of the whole of the Indian Bar Councils 63 Act will not, therefore, affect the validity of the rules framed by the High Courts under their respective Letters Patent determining the persons who will act and who will plead or who will act and plead and those rules will prevail their own strength and efficacy, although the rules regulating the conditions subject to which foreign advocates can be permitted to appear and plead will stand abrogated by reason of the non obstante clause.
In the premises, the result of the construction sought to be founded by the petitioner Aswini Kumar, Ghosh the existence of the comma in the non obstante clause will be precisely the same as it would have been if the comma had not been there and the adjectival clause "regulating the conditions etc." also attached to and qualified the words "Indian Bar, Councils Act.
" In short, there is no escape from the, conclusion that the ambit, scope and effect of the non obstante clause are, to supersede the and any other Act only in so far as they regulate the conditions referred to therein.
I again emphasise that the rules of the different High Courts regulated the conditions subject to which a foreign advocate would be permitted "to appear and plead.
" There was no question of the foreign advocate "acting" in a High Court of which he was not an advocate.
The purpose of the non obstante clause is to supersede only the provisions of the and the rules which regulated those, identical conditions.
It is not seriously disputed that the legislature in passing the non obstante clause had only those conditions in mind.
There can be no manner of doubt, therefore, that the words "to practise" in the non obstante clause mean, in the context, "to appear and plead".
The petitioner Aswini Kumar Ghosh then falls back on a second line of reasoning.
He urges that whatever may be the meaning, scope and effect of the non obstante clause, it cannot possibly cut down the meaning of the positive words in the operative part of the section.
His contention is that the High Court war, wrong in holding that the non obstante clause was 64 coextensive with the operative part.
While it may be true that the non obstante clause need not necessarily be coextensive with the operative part, there can be no doubt and the petitioner and Dr. N. C. Sen Gupta appearing for the Calcutta Bar Association and supporting the petitioner do not dispute that ordinarily there should be a close approximation between the two.
What he urges is that the Court should not create an ambiguity in the operative part and then use the non obstante clause to cut down the meaning of the plain words used in the operative part of the section.
The argument is that the words "to practise" cover both acting and pleading and that, therefore, the operative part of the section authorises the advocate of the Supreme Court as of right "to practise", that is, "to act and plead", in any High Court.
The whole case of the petitioner is founded this plea.
It is necessary, therefore, to consider whether the critical words have that invariable and fixed meaning when used in relation to an advocate.
The verb "practise" according to the Oxford English Dictionary, Vol.
VIII, p. 1220, means : to work at, exercise, pursue (an occupation, pro fession or art) ; to exercise the profession of law or of medicine.
Similar meaning is to be found assigned to the word in Dr. Annandale 's New Gresham Dictionary.
According to this meaning doctors "practise", consulting architects "practise" as well as lawyers "practise" but we know that each of them does different things.
Coming to lawyers we find that there are different categories of lawyers all of whom "practise", although all of them do not do the same thing.
Thus attorneys "practise" in the Original Sides of the High Courts of Calcutta and Bombay and the agents "practise" in the Supreme Court but we know that under the rules of those Courts the attorneys, and agents only "act".
The advocates also, "Practise" but we know that all of them do not perform the same functions.
The advocates of all High Courts including those of the Appellate Sides of the Calcutta and 65 Bombay High Courts , under the rules of their respective High Courts, "act and plead" and, as the ambit of the profession of such advocates extends to acting and pleading, the words "to practise" in their application to those advocates undoubtedly mean "to act and plead".
The advocates of the Original Sides of those two High Courts can, under the rules, 'only " plead".
the Original Side and the ambit and scope of the profession of these Original Side advocates being limited only to pleading, the words "to practise" used in reference to these advocates must mean "to plead" only.
There are thus different species of lawyers, some of whom, e.g., attorneys of the Original Sides of Calcutta and Bombay High Courts and agents of this Court, only "act", some others of whom, e.g., the Original Side advocates of those two High Courts and of this Court, only "plead" and all the remaining advocates of all the High Courts both "act and plead".
The scope of the professional activities of the different categories of lawyers thus varies but, nevertheless, they are all said "to practise".
These words, therefore, connote the general idea of exercising the legal profession, which is their dictionary meaning, and in that general sense apply to all lawyers as a class or genus but at the same time they are capable, in their application to particular species or categories of lawyers, to connote the different professional attributes of those different categories or species.
Turning to the we find that the expression "to practise" has been used in various sections in the generic sense I have mentioned.
Let me illustrate my meaning by reference to a few sections.
Section 4 of that Act deals with the composition of Bar Councils.
Sub section (1) provides that every Bar Council shall consist of 15 members, of which 10 shall be elected by the advocates.
Sub section (2) then provides : "(2) , Of the elected members of every Bar Council not less than five shall be persons who have for not less than ton years been entitled as of right to 66 practise in the High Court for which the Bar Council has been constituted .
" If we give the general dictionary meaning to the words "to practise" used in this sub section then this sub section becomes easily intelligible, but if we say that they mean "to act and plead" then the eligibility will be confined to the advocates who, under the rules, can "act and plead", i.e., to the Appellate Side advocates, and the result of that construction will be that the advocates of the Original Sides of Calcutta and Bombay High Courts even though they are of ten years ' standing will not be eligible for election, for, such advocates do not and indeed cannot, under the rules, "act and plead".
Such surely cannot be the case.
It follows, therefore, that the words "to practise" in this sub section have been used in their generic sense although they connote different things when applied to different categories of advocates all of whom are within the subsection.
Sub section (3) rung thus: (3).
Of the elected members of the Bar Councils to be constituted for the High Courts of Judicature at Fort William in Bengal and at Bombay such proportion as the High Court may direct in each case shall be persons who have for such minimum. period as the High Court may determine, been entitled to practice in the High Court in the exercise of its original jurisdiction, and such number as may be fixed by the High Court out of the said proportion shall be barristers of England or Ireland or members of the Faculty of Advocates in Scotland.
" If we give the words "to practise" their ordinary dictionary meaning,then the sub section will be quite easy of comprehension but if we say that those words mean "to act and plead " then the sub section will become meaningless, for those words in that sub section refer to the practice of the Original Side advocates only who do not and indeed under the rules cannot at all act on the Original side.
It is, there 'fore, clear that the words " to practise " have been used in both sub sections in their generic meaning which is also their dictionary meaning, namely, " to 67 exercise their profession", although in their application to the different species who are within the sub , sections they mean different professional attributes.
Thus, in sub section (3) which applies to Original Side advocates only they must mean "to plead" whereas in sub section (2) which applies to all categories of advocates the words have different meanings, that is to say, in relation to advocates other than Original Side advocates they mean "to act and plead" and in relation to the Original Side advocates they mean only "to plead".
Same remarks apply to section 5 (1).
It will be futile to refer to the principle that the same word should be given the same meaning wherever it occurs in the Act, for the context excludes the application of that principle.
Take section 8 (2) of the which provides: "8.
(1). . . . (2) The High Court shall prepare and maintain a roll of advocates of the High Court in which shall be entered the names of ' (a) all persons who were, as advocates, vakils or pleaders, entitled as of right to practise in the High Court immediately before the date which this section comes into force in respect thereof;. . .
It we do not give to the words "to practise ' in clause (a) their dictionary meaning but read them as meaning "to act and plead" the advocates practising, i.e., only pleading the Original Sides of the Calcutta and Bombay High Courts, will not find their names in the rolls maintained by their respective High Courts under this section.
That exclusion is certainly not the purpose of this subsection.
Therefore, in this sub section also the words "to practise", means "to exercise their profession".
Same remarks apply to the proviso to section 8 (3) (b).
I come next to section 14 which provides inter alia: "14.
(1) An Advocate shall be entitled as of right to practise (9) subject to the provisions of sub section (4) of section 9, in the High Court of which he is an Advocate;. . 68 By sub section (3) nothing in this section shall be deemed to limit or affect the power of the Calcutta and Bombay High Courts to make rules determining the persons who are respectively to plead and to act the Original Sides of those High Courts.
Both those High Courts have made rules under which an Original Side advocate can only "plead", the acting having been reserved exclusively for the attorneys.
In the light of the context what is the meaning of the words "to practise" in sub section (1) above ? If we put the ordinary dictionary meaning the words "to practise", namely, "to exercise his profession", the section will be found to be quite intelligible and workable; but if we take them to mean only "to act and plead" then the Original Side advocates who do not "act" but only "plead" will not, strictly speaking, be within the section and consequently will not be able to avail themselves of the protection of section 14 (1) (a).
Can it, for a moment, be said that the section gives protection and security to all advocates other than the Original Side advocates and that the latter are not entitled as of right "to practise", i.e., "to plead", in the High Court of which he is an advocate? That cannot be so.
The very fact that the right is subject to the provisions of section 9 (4) and that the rule making power of the two High Courts is not affected by virtue of section 14 (3) quite clearly show that the Original Side advocates who cannot act the Original Side are intended also to be included in the term advocate used in sub section (1).
If, therefore, this section is to give any security ' to the Original Side advocates, as it does to the Appellate Side advocates, then we must read the words "to practise" in their ordinary dictionary meaning, namely "to exercise his profession".
It is thus clear that the words "to practise" have been used throughout the in their general dictionary meaning mentioned above except at the end of section 9 (4).
In the same way the word "practising" has been used in Order IV, rule 31, of the Supreme Court Rules in the same generic sense and being used in relation to 69 advocates of this Court it must mean appearing and pleading".
In the next following rule the same word has been used in its dictionary meaning although having been used in relation to agents of this Court it must mean "acting".
The same ' generic meaning given to the words to practise" will make, section 4 of the easily intelligible and workable The petitioner Aswini Kumar Ghosh, the other hand, relies article 220 of the Constitution and points out that while the words used in the body of the article forbid judges "to plead or act" the marginal note to the article describes the subject matter of the article as "prohibition of practising" and concludes that " to practise " means "to act and plead".
In agreement with the High Court I am unable to accept this reasoning., Even assuming that the marginal note may by looked at in considering the article it only means that the draftsman of the marginal note considered that the single word " practise " would be a compendious one.
Nobody disputes that the words "to practise" may, in a particular context, mean "to plead or act" but it does not follow that it invariably has that meaning.
Further it is clear, as the High Court points out, that what the draftsman did was to find a word which would cover both acting and pleading without attempting to bring out the technical distinction between the two.
Nor do I think, for reasons stated by the High Court, that entry 78 of List I in the Seventh Schedule lends any support to the petitioner 's contentions The petitioner then refers us to the decision in Laurentius Ekka vs Dhuk Koeri(1) in support of his contention that the judicial accepted meaning of words "to practise" is "to appear, act and plead" In that case the question was whether an advocate the roll.of the Patna High Court, could present and move a review petition in a subordinate court unless he filed 'a Vakalatnama or was instructed by a pleader (1) (1925) I.L.R. 4 Pat.
766 19 70 of the subordinate court.
It was held that an advocate of the High Court, unlike a pleader, aid not need to be appointed in writing to act behalf of his client and even when verbally appointed he could under Order III, rule 1, of the Code of Civil Procedure appear, plead and act behalf of his client and, therefore, when section 4 of the , provided that every person entered as an advocate or vakil the role of any High Court under the Letters Patent should be entitled to "practise" in all Courts subordinate to such High Court, the word " practise" as applied to an advocate of the Patna High Court meant "appear, plead and act".
The ratio of the decision is obvious.
The scope and ambit of the Patna High Court advocate 's profession covered acting and pleading, and when such an advocate was given the right to practise" in the subordinate court be was authorised to exercise his profession in full, i.e., to act and plead in the subordinate court.
In short, the advocate carried the attributes of his profession with him even when he went to exercise his profesSion in the lower court.
This decision is no authority for the proposition that the words "to practise" have a fixed and invariable meaning comprising acting and pleading in all cases.
The petitioner Aswini Kumar Ghosh then referred us to the case of In re Powers of Advocates(1).
, In Madras the High Court in exercise of its powers under clause 9 of the Letters Patent framed a rule empowering advocates to appear, act and plead the Original Side.
That rule was held to have been validly made in two earlier decisions.
But Rules 128 and 129 of the Insolvency Rules permitted an advocate only to " appear and plead" in 'the Insolvency Jurisdiction and the attorney to act there.
In these circumstances the question arose in the Madras case whether advocates enrolled under the , were entitled to "act" in the Insolvency jurisdiction of the Madras High Court,notwithstanding that under the rules framed by the High Court they were (2) Mad.
71 only entitled to "plead" and the Full Bench answered the question in the affirmative.
The reasoning underlying this decision, as I understand it, was that the general ambit and scope of the profession of a Madras High Court advocate being, according to its rule, "to appear, act and plead" in the Original Side, the words "to practise" used in section 8 (1) and section 14(1) of the must, in relation to him, mean "to appear, act and plead".
Rules 128 and 129, however, said that he could only appear and plead but not act.
There being no saving of the power of the Madras High Court as there was of that of the Calcutta and Bombay High Courts by section 9 (4) and section 14 (3) and those insolvency rules being inconsistent with the provisions of sections 8(1) and 14(1) as construed by the Full Bench, that rule should, under sections 19(2) be deemed to have been repealed.
I am unable to accept the correctness of this reasoning.
The combined effect of the two sets of rules was that & Madras advocate was entitled to act and plead throughout the Original Side except in Insolvency Court which was also a part of the Original Side.
It was, therefore, not correct to say that the Madras advocate was entitled to act and plead in the Original Side.
The passage in the judgment of Kumaraswami Sastri J. at p. 103, namely that "the word 'practise ' ordinarily means 'appear, act and plead ', unless there is anything in the subject or context to limit its meaning" is not supported by any authority and appears ,to me to be too wide.
Indeed, the learned Judge himself recognised this, for throughout the judgment it was emphasised that the word "practise", when applied to a Madras Advocate, meant "to appear, act and plead".
It is clear from, that judgment that, according to the learned ' Judge, the words had not that wide meaning in their application to the Original Side Advocates of the Calcutta and Bombay High Courts.
In any event, that passage should, in the context,, be limited in its application to the Madras High Court advocates and all advocates of all other High Courts who, by their rule6, are permitted to act 72 Pand plead, for it cannot possibly have that meaning in relation to an Original Side,advocate who is permittad only to plead.
This passage in the Madras decision could not have been intended as an enumeration of the professional activities of an advocate as forming the invariable contents of the words "to practise" or as an enunciation of a fixed meaning of general application.
In this country where there exists, as a historical fact, a clear division of legal practitioners into three separate classes, namely, those who act only, those who only plead and those who do both act and plead such a definition will be wholly inaccurate.
It is necessary, therefore, to give to those words their generic meaning I have mentioned.
In this view of the matter, I agree with the High Court that the ,petitioner can derive no support for his contention from either of these two decisions.
My attention has also been drawn to the case of The Queen Doutre(1) where it was held that in Canada ,where. the functions of Barristers, and Solicitors are united in the same person, the rules of English law which precludes a Barrister to sue for his fees do not apply and that a Quebec advocate could sue for his remuneration a quantum meruit basis.
I do not see how that case throws any light the problem before us.
In Queen all advocates "act and plead" and as regards Quebec advocates the critical words may cover both acting and pleading, but how can that circumstance assist us in ascertaining the meaning of those words in enactments of our country where we bave a clear division, of the legal practitioners into three categories I have, mentioned ? The result of the foregoing discussion as to the meaning of the words "to practise" appears to me to be that in relation to lawyers as a class they mean "to exercise their profession" which is their dictionary meaning and which is wide enongh, to cover the activities of the entire genus of lawyers.
They are words of indeterminate import and have no fixed connotation or content.
In their application to particular (1) 73 species of lawyers their meaning varies according to the scope and ambit of the profession of that particular species in relation to whom they may be used, and such meaning has to be ascertained by reference to the subject or context.
Further, the Legislative technique, as is evident from the , the and the Rules of the Supreme Court to which reference has been made, is to use these neuter words in a generic sense although in their application to specific categories or species of lawyers they have different connotations which are to.
be ascertained from the context in which they are used.
The question, therefore, at once arises: What in the context and a true construction of the Act we are considering, is the meaning of the words "to practise"? The petitioner Aswini Kumar Ghosh urges that the words "to practise," in relation to all advocates of all the 20 High Courts, except the Original Side advocates of the Calcutta and Bombay High Courts only, mean "to act and plead" and seeing that this is the meaning applicable to the vast majority of advocates, those words must be given that meaning.
Am I to apply the rule of majority in construing a statute? Am I to assume that the Legislature had forgotten or deliberately ignored the hard historical fact that there exists a large body of advocates,of not inconsiderable importance who "practise", that is only "plead" the Original Side of two premier High Courts in India? Or am I to assume that the Legislature intended, by the use of a dubious expression of indefinite import, to swamp one whole class of legal practitioners, namely, the Attorneys of those two High Courts? I find not the slightest indication of such intention anywhere in this Act.
the contrary, the title of the Act and the non obstante clause of section 2 itself run counter to such contention.
I have already pointed out that the words "to practise" have been used in the non obstante clause in the sense of "appearing and pleading" only and that nobody can for a moment doubt that in 'the non obstante clause the 74 Legislature had in mind the provisions of the and the rules of the High Courts regulating the conditions subject to which a foreign advocate was permitted "to appear and plead" in a High Court of which he was not an advocate.
If that be so, it is legitimate to infer that the Legislature in the operative part of the section gave expression and effect to what it had in its mind when enacting the non obstante clause.
If the intention of the legislature were otherwise, why did not the Legislature say openly and in a straightforward way that it gave the Supreme Court advocate the right "to act and plead" in any High Court ? Why did it use the dubious words "to practise" ? It is not correct to say that those words have been used in the only in the sense of "acting and pleading".
As already explained, those words have been used in their ordinary dictionary meaning, namely, "to exercise his or their profession" so as to cover the entire genus or class of Advocates, although in their application to different categories or species they have different connotations as explained above.
Seeing that the legislative practice is to use those words in their general dictionary meaning, there is no reason to suppose that the Legislature intended to depart from this practice while enacting this piece of legislation.
It is asked: why did not the Legislature then insert in this Act a saving clause like sections 9(4) and 14(3) of the ? The argument is that the absence of such a saving clause in this Act constitutes a departure from the legislative practice followed in the and, therefore, the words "to practise" in the operative part of section 2 must have their widest meaning.
A little reflection will show that this argument is not sound.
The rule making power of the High Courts under clause 9 of the Letters Patent was and is with respect to advocates, vakils and attorneys admitted and enrolled by the, High Courts.
The dealt with advocates enrolled by the High Courts and, ' therefore, it was 75 considered safer to provide that nothing in th a Act should affect or limit the rule making powers of the High Court.
Indeed, if the critical words were, as I think, used in a generic sense, the saving clauses must have been inserted ex abundanti cautela.
Be that as it may, as the High Courts ' power to make rules under clause 9 extended only to the advocates, vakils and attorneys enrolled by them and as the also dealt with advocates enrolled by the High Courts, the insertion of the saving clauses in the last mentioned Act is intelligible.
But a saving of the rule making powers of High Courts over their own advocates etc., is entirely out of place ' in an Act which is concerned not with High Court advocates but with Supreme Court advocates only ' The High Courts have no power under clause 9 of the Letters Patent to make any rule to govern the conduct and activities of the Supreme Court advoCates and this Act only deals with Supreme Court advocate and confers a new right them.
Therefore a saving of the High Courts ' rule making power over their advocates would have been wholly meaningless and inappropriate, for such saving clause would not have given the High Courts any power to make any rules with respect to the Supreme Court advocates There was, therefore, no necessity or occasion for inserting any saving clause the lines of sections 9 (4) and 14 (3) of the .
NO , thing can, therefore, be founded the absence of a saving clause the lines of that Act.
The petitioner Aswini Kumar Ghosh argues that the text of the original Bill, the statement of objects and reasons over the signature of the Law Minister attached thereto and the debates in the Legislature resulting in the deletion of what was clause (a) of the proviso as it existed in the original Bill will clearly show what the intention of the Legislature was.
In the original Bill as introduced in the Legislature there was a proviso to section 2 which ran thus: "Provided that nothing in this section shall be deemed to entitle any person, merely by reason of his being an Advocate of the Supreme Court 76 (a) to plead or to act in any High Court in the exercise of its original jurisdiction ; or (b) to practise in a High Court of which he was at any time a Judge, if he had given an undertaking not to practise therein after ceasing to hold office as such Judge.
" The argument is that the objects and reasons clearly show that the intention was that section 2 should not affect the Original Sides of the two High Courts, and clause (a) was inserted in the proviso in order to achieve that purpose.
This shows that if clause (a) was not there, section 2 would have, entitled the Supreme Court advocate "to practise", i.e., "to appear, act and plead" in all High Courts in all their several jurisdictions.
This conclusively shows that the words 'to practise" were used in that larger sense.
Indeed in the objects and reasons those words were expressly stated to be synonymous with "to act and plead".
The argument is apparently formidable but reflecttion will be found to be devoid of any substance.
There is authority for the proposition that the proceedings of the Legislative Council are to be excluded from consideration in the judicial construction of an Act and that the debates in the Legislative Council, reports of select committees and statements of objects and reasons annexed to a Bill may not be referred to: Administrator General of Bengal vs Prom Lal(1).
When construing section 68 of the Indian Companies Act, 1,882, the Privy Council in Krishna Ayyangar vs Nella Perumal(2) observed that no statement made the introduction of the measure or its discussion can be looked at as affording any guidance is to the meaning of the words.
It is neither necessary nor profitable to go into the numerous decisions all of which it may be difficult to reconcile but it is quite clear from the decision of this Court in the case of A. E. Gopalan vs The State of Madras(3) that the debates and speeches in the Legislature which, reflect the individual opinion of the speaker cannot (1) (1895) 22 I.A. 107.
(3) ; , (1920) 17 33. 77 be referred to for the purpose of construing the Act as it finally emerged from the Legislature and so the debates must be left out of consideration.
The statement of objects and reasons attached to the Bill only depicts the object which the sponsor of the Bill had in mind, but it throws no light the object which the Legislature as a body had in mind when passing the Bill into an Act.
If I may borrow and adapt the felicitous language used by my Lord the present Chief Justice in that case those objects and reasons may at best be indicative of the subjective intention of the Law Minister who sponsored the Bill but they could not reflect the inarticulate mental processes lying behind the majority vote which carried the Bill.
Nor is it reasonable to assume that the minds of all those legislators were in accord.
The first Privy Council decision referred to above rejected any reference to the debates or the objects and reasons.
So did M. N. Mukherji J. in Debendra Narain Roy vs Jogendra Narain Deb(1).
Reference may also be made to Craies Interpretation of Statutes, 5th Edn., at p. 123, regarding the memoranda attached to the Bill.
In my opinion it is safer to follow the orthodox English view and leave the objects and reasons out of consideration.
The petitioner Aswini Kumar Ghosh points out that in Gopalan 's case (supra) this Court did look at the original draft of what eventually became article 21 of the Constitution as throwing some light the construction of that article and urges that we should look at the original Bill and draw appropriate inferences from the fact of the omission of clause (a) of the proviso from the Act.
What was looked at in that case was the Report of the Drafting Committee appointed by the Constituent Assembly.
That Report was akin to a Report of a Select Committee made after consideration of a Bill referred to it by the Legislature for consideration.
In that Report the Drafting Committee recommended the substitution of the expression "except according to procedure established (1936) A.I. R. at p. 619.
78 by law" taken from the Japanese Constitution for the words "without due process of law" which occurred in the original draft "as the former is more specific." The Drafting Committee further explained that they had attempted to make the fundamental rights conferred by the article in question and the limitations to which they must necessarily be subject as definite as possible since the Courts may have to pronounce upon them.
The Constitution as it was finally adopted showed that the Constituent Assembly had accepted the amendment suggested by the Drafting Committee.
The fact that the Drafting Committee was, in a sense, the agent of the Constituent Assembly, and that the amendment proposed by the Drafting Committee was in fact adopted by the Constituent Assembly, may conceivably lead to the inference that the reasons given by the Drafting Committee were also accepted by the Constituent Assembly and that the intention of the agent, the Drafting Committee, reflected the intention of the principal, the Constituent Assembly.
This, I apprehend, was the underlying reason why the majority of this Court expressed the view that the Report of the Drafting Committee could be looked at as historical material throwing some light the question of construction of the article 21.
That underlying reasoning does not, however, apply to the present case.
This Court, consistently with the principles laid down in numerous judicial decisions, some of which I have cited above, held that recourse could not be had to the debates in the Legislature in construing the Act. ' To keep out the debates which may, in some degree, have disclosed the considerations operating the minds of the vocal section of the Legislature and the intention with which they moved the amendment and then to refer to the text of the original Bill and the fact that some words or clauses thereof do not find a place in the Act as eventually passed in order to ascertain the state of mind of the members of the Legislature who passed the Act will, to my mind, be indicative of a mental process which can hardly be 79 for my learned colleagues who had pronounced upon the admissibility of the Report of the Drafting Committee, I feel pressed to adhere to and abide by the views expressed by them that point, I am certainly not prepared to go further and to extend the principle of that decision that question by permitting a reference to the original Bill.
Assuming that the reasoning of the decision in Gopalan 's case(1) regarding admissibility of the Report as an aid to construction may, in certain circumstances, be applicable to the original Bill, we have yet to consider whether in the case now before us the original Bill should be referred to.
In Gopalan 's case(1) Kania C. J. said at p. 110: " The report may be read not to control the meaning of the articles, but may be seen in case of ambiguity." Again at p. 111 the learned Chief Justice stated:"Resort may be had to these sources with great cautiou and only when latent ambiguities are to be resolved." In point of fact the learned Chief Justice did not find the words of article 21 to be ambiguous so as to require recourse to the Report of the Drafting Committee to ascertain the intention of the Constituent Assembly.
My Lord the present Chief Justice and Fazl Ali J. and Mukherjea J. did refer to the Report.
In the view taken by Mahajan J. it was not necessary for him to express any opinion this instant problem.
I did not refer to the debates or to the Report of the Drafting Committee and stated at p. 297 and at p. 323 that I would express no opinion as to the admissibility of the Report or the debates.
It is, however, clear from the passages I have quoted, from the judgment of the late Chief Justice that the Report of the Drafting Committee could be looked at only to resolve ambiguity and not to control the meaning of the article if it was otherwise plain, for the intention of the Constituent Assembly was to be gathered primarily ' from (1) ; 80 the words used in the Constitution.
The question at once arises: is there any ambiguity in section 2 as it now stands which requires a reference to the original Bill for its solution ? Having regard to the state of the law as it existed before this Act was passed, namely, that by the rules of all High Courts an advocate of one High Court could only "appear and plead" in another High Court if he could obtain the permission of the Chief Justice ' of the latter Court the mischief that followed from these rules and was unprovided for, namely, that even eminent advocates were.
not accorded such permission for no apparent reason and.
the fact that the object of this Act, as indicated in the full title and the non obstante clause in section 2 was undoubtedly to remedy this defect.
So far as the Supreme Court advocates were concerned all which circumstances are to be taken into consideration in construing an Act as stated in Heydon 's case (1) and finally the legislative practice of using the words "to practise" in their ordinary dictionary meaning, as I have explained already, I find no ambiguity whatever in the operative part of section 2.
The meaning and intent of the section appear to me reasonably plain and I do not consider it necessary to have recourse to the original Bill at all to ascertain the meaning and intent of the words used in the section.
It is wrong to imagine or create ambiguity and then to call in aid the original Bill and to speculate as to the intention of the Legislature.
Again, assuming that the original Bill has to be looked at in ascertaining the meaning of section 2, I do not derive any assistance from the mere circumstance that clause (a) of the proviso which appeared in the original Bill does not find a place in the Act as it finally emerged from the legislative anvil.
The mere fact that that proviso was omitted from the Act as finally passed does not by any means lead us to the conclusion that the construction put upon the section by the petitioner Aswini Kumar Ghosh must be correct.
There is no reason to assume that the (1) ; 81 legislators read the words"to Practise" as meaning "to appear, act and plead" If they read the words to mean " to appear and plead only, which is the ambit and scope of the profession of Supreme Court advocates under the rules of this Court and of the Original Side advocates of those two High Courts then, in so far as the proviso purported not to extend the application of the section to " 'acting" the Original Side it was wholly unnecessary and may have accordingly been deleted as not being necessary.
Further, if the intention was to give the Supreme Court advocates a right to appear and plead only in any High Court in any of its jurisdictions, then the proviso, in so far as it purported not to extend the section to pleading the Original Side of those two High Courts, could not be retained.
If, therefore, the intention of the operative part of the section was that the Supreme Court advocate would have the right only "to appear and plead", which is consonant with the functions of a Supreme Court advocate and also co extensive with the rights of the Original Side advocates of the Calcutta and Bombay High Courts under the rules, the proviso had to be deleted in full and, therefore, no argument can be founded the fact of such deletion.
We have, therefore, to construe the operative part of the section by reference to the intention we can gather primarily from the language used in the section and other parts of the Act itself.
The Legislature which enacted the statute was well aware of the state of the law as embodied in the rules of different High Courts preventing an advocate of one High Court from, as of right, " appearing and pleading " in another High Court of which he Was not an advocate.
The mischief of withholding of the permission by the Chief Justices no better ground than the absence of reciprocity between the High Courts was notorious.
The Act set out to remedy that mischief as is obvious from the full title and the non obstante clause in section 2 of the Act as I have herein before explained.
It was known to the Legislature that an advocate was by Order 1, rule 2, of the Supreme 82 Court Rules defined as a person entitled only "to appear and plead" before the Supreme Court, that under Order IV,rule 11, no person could appear as an advocate unless instructed by an agent and that under Order IV, rule 30, such an advocate could in no circumstances "act" as an agent, In short, the Legislature knew that the scope or ambit of the Supreme Court advocate 's profession was only "to appear and plead".
With all this knowledge the Legislature enacted section 2 authorising every advocate of the Supreme Court "to practise as of right in any High Court".
Applying the dictionary meaning to the word "practise," the section authorises every Supreme Court advocate "to exercise his profession as of right in any High Court".
The scope and ambit of the Supreme Court advocate 's profession being only "to appear and plead" there can be no escape from the conclusion that the section authorises the Supreme Court advocate only "to appear and plead" in any High Court.
The reasoning is the same as that adopted or involved in the Patna case referred to above.
An advocate of the Patna High Court was, under its rules, entitled "to appear, act and plead" in that High Court.
When section 4 of the authorised such advocate "to practise" in the subordinate Court it was held in the Patna case to mean that the advocate could do all that he could do in the High Court, namely, "appear, act and plead".
The words "to practise" were held to cover all these activities not because those words had that invariable ,meaning but because those words had that meaning only in relation to advocates who by the rule of the High Courts were entitled "to appear, act and plead In short, the content of those words varies with the ambit and scope of the profession of the advocate with regard to whom they are use a parity of reasoning, the Supreme Court advocate being entitled only "to appear and plead", when section 2 authorised him "to practise" in any High Court, it must be taken to have meant that he was authorised to do in the High Courts all that he was entitled to do in the 83 Supreme Court, namely, "to appear and plead" only.
This construction appears to me to be quite logical and calculated to give effect to the object of the Act.
It brings about a close approximation between the non obstante clause and the operative part of the section which should be the aim of every well drawn statute.
It is asked: bow can a Supreme Court advocate who can only "appear and plead" when he is instructed by an agent, "appear and plead" in any High Court where there are no Supreme Court agents to instruct him ? This, in my opinion, is taking an extremely narrow view of the matter.
The Supreme Court advocate 's profession being confined only to appearing and pleading, when he is authorised "to practise", i.e., to exercise his profession in any High Court, he must carry with him his professional limitations but must be governed by those rules of High Courts which regulate the practice of advocates who can only " appear and plead" ' in the High Courts, for he cannot practise in vacuo.
Seeing that there are persons authorised "to act" in every High Court who may instruct another advocate, no practical difficulty can arise in the way of the Supreme Court advocate appearing and pleading in the High Court.
Under Ch.
I, rule 38, of the Calcutta Original Side Rules a Barrister advocate of any other High Court or an Original Side advocate of Bombay is permitted to "appear and plead" in the Original Side of the Calcutta High Court with the permission of the Chief Justice.
Surely, nobody has ever suggested that such a foreign advocate must carry with him an instructing advocate or attorney of his own court who is competent to act in order to instruct him when he appears and pleads in the Calcutta High Court.
He is instructed by an attorney of the Original Side of the Calcutta High Court without any difficulty.
Same remarks apply when an Original Side advocate of Calcutta goes to appear and plead the Original Side of Bombay under Ch.
I, rule 6, of the Bombay rules, for surely such an advocate does not carry a Calcutta attorney with him but is quite satisfactorily 84 instructed by a Bombay attorney.
An Original Side advocate of the Calcutta or Bombay High Court who cannot appear the Original Side unless instructed by an attorney can and frequently does appear and plead the Appellate Side the instruction of an advocate of the Appellate Side who being entitled to act can instruct the Original Side advocate to appear and plead.
If we adopt this construction, the Act becomes workable, but if we adopt the construction suggested by the petitioner, then the Supreme Court advocates practising in High Courts by virtue of the Act will become freelances creating chaos and confusion as I shall hereinafter more fully explain.
In my opinion there is no substance at all in this objection of the petitioners.
It is next pointed out that the result of this construction will be to make the new right illusory in that a Supreme Court advocate will not be entitled to "act" even the Appellate Side of a High Court where he is not enrolled and such a resuIt will militate against the principle of the unification of the Indian Bar.
This objection is obviously based the assumption that the object of this Act is to bring about such a drastic and far reaching result.
There is no warrant which I can see for any such assumption.
I have already mentioned that the point of controversy this subject was that an advocate the roll of one High Court could not as of right "appear and plead" in other High Courts but had to depend the good graces of the Chief Justices of such other High Courts who frequently.
withheld the requisite permission even to very.
eminent advocates.
There was hardly ever any claim made by an advocate of one High Court "to act" as an advocate of another High Court of which he was not an advocate.
The limited object of this Act appearing from its full title and the non obstante clause as explained above was to remedy only this particular defect by providing that an advocate of the Supreme Court would be entitled as of right "to practise", i.e., exercise his profession, i.e., "to appear and plead", in any High Court even though 85 he was not ' the roll of that High Court.
This certainly was an important step in the process of bringing about uniformity in the Indian Bar, for it did bring into,: being a category of advocates who might "appear and plead" in all Court 's throughout India and form the nucleus of an all India Bar.
More than this was not within the scope and object of this Act as I apprehend it.
To adopt a construction which will permit a Supreme Court advocate who is also enrolled in the High Court of, say Travancore Cochin in the south or off the State popularly called Pepsu in the north, to go and "act" in the Original Sides of the High Court of Calcutta or Bombay which the advocates of those High Courts cannot do, will lead to no end of confusion as will be explained more fully hereafter and that consideration alone should induice me to discard the petitioners ' construction and adopt a construction which will not give rise to practical inconvenience.
It is pointed out that while this construction may bring about a perfect approximation between the non obstante clause and the operative part of section 2 by entitling only foreign Supreme Court advocates "to appear and plead" in any High Court as of right,, it runs counter to the concluding words of the operative part of section 2, namely, "whether or not he is an Advocate of that High Court", for, it is urged, those words clearly indicate that the section purports to confer a Supreme Court advocate the right to practise not only in a High Court of which he is not an advocate, but also to give him some right in rela tion to his own High Court.
The Court below has held that the words "whether or not" are not quite apposite and that what was meant was that a right was given to every Supreme Court advocate "to practise" in any High Court even if he was not an advocate of that High Court.
In other words, the Act itself gives a right to the Supreme Court advocate to practise as of right in any High Court and that being so it was immaterial to consider whether he was an advocate of a particular High Court or not, i.e., 86 irrespective of his being or not being an advocate of that High Court.
I am inclined to agree with this view.
Let me, however, test the soundness of the view propounded by the petitioner the strength of the words "whether or not etc.
" Take the case of an advocate of the Madras High Court.
Under the rules of the Madras High Court be is entitled "to appear, act and plead" in all its jurisdictions.
When such an advocate is enrolled as an advocate of the Supreme Court, section 2 of the Act, as construed by the petitioner, really gives him no additional right in relation to his own High Court, for already he is entitled "to appear, act and plead" there.
That is the position also with regard to the advocates of all High Courts, other than the High Courts of Calcutta and Bombay in the matter of their right to practise in their respective High Courts.
Seeing that the advocates of 18 High Courts did not in fact get any new right in their respective High Courts, it cannot reasonably be said that the object of the Act was to give any right to an advocate of a particular High Court in respect of his own High Court.
It is pointed out that an advocate enrolled the Appellate Sides of the Bombay and Calcutta High Courts is not, as of right, entitled to appear, act and plead the Original Side and the object of the Act was to give those Appellate Side advocates of the Calcutta and Bombay High Courts some additional rights in the Original Side of their own High Courts.
In view of the fact that the Act gives no additional right to the advocates of any of the 18 High Courts in relation to their respective High ' Courts it is difficult to imagine that the object of the Act was to bestow some special favours only the.
advocates of the Appellate Sides of the Calcutta and Bombay High Courts.
Therefore, it appears to me that the words "whether or not etc." read in the light of the purpose of the Act appearing from the full title and the non obstante clause only emphasise that the object was to give the Supreme Court advocate a statutory right to practise in any High Court 87 of which he was not an advocate, irrespective of his other rights, if any.
It is a new right given by the Act proprio vigore to a class of foreign advocates.
Further, if the use of the words "whether or not etc." must necessarily mean that the object of the Act was to give a special right to an Appellate Side advocate of the Calcutta and Bombay High Courts in relation to his own High Court it does not necessarily follow ' that the words "to practise" must be given such a wide meaning as would also cover acting, for if the words ' "to practise" are read as extending only to appearing and pleading, even then the Appellate Side advocates of the Calcutta and Bombay High Courts would get some additional right in their own High Courts in that they become entitled by virtue of their position as Supreme Court advocates "to appear and plead" the Original Side without having to take steps under the respective rules of those High Courts to entitle them to appear and plead the Original Side.
In this view of the matter also the con cluding words "whether or not etc. " cannot affect the construction put by me the operative part of the section.
Even if I am wrong in adopting the foregoing line of reasoning, the petitioner will yet have to meet an alternative construction which has commended itself to the learned Judges of the High Court and my learned brother Mukherjea, and which I am also prepared to accept as a cogent alternative.
The Act authorises every advocate of the Supreme Court as of right " to practise " in any High Court.
The use of the words "to practise " in relation to an advocate clearly indicates that he is to exercise the profession of an advocate.
To exercise the profession of an advocate in a High Court must involve the observance of the rules of practice of 'that High Court.
It is urged that this construction amounts, in reality, to adding words to the section, namely, as an advocate of that Court" or "according to the rules of that Court.
" This contention is founded a clear misaprehension, for I am really not adding anything at 88 all but I am only stating what is implicit in the section as it stands.
, In other words, I am construing the words of the section and ascertaining its true meaning and import.
The necessary implication of the fact that the Supreme Court advocate is to exercise his profession in any High Court may well be that he becomes entitled to do whatever an advocate (if that particular High Court can do under the, rules of practice of that High Court.
Thus when the Supreme Court advocate goes to practise in the, Appellate Side be will be entitled to act and plead as an Appellate Side advocate does and when he goes to practise in the Original Side he will only plead as an Original Side advocate does and in either case be must abide by the relevant rules, for he must practise.
as an advocate of the particular High Court does, namely, under and subject to the rules.
Nobody has ever suggested that an advocate or vakil authorised to practise in subordinate courts or in any other High Court under section 4 of the was not bound by the rules of the Court where he went to practise.
It is argued that the rules of the High Courts of which the Supreme Court advocate is not an advocate cannot in terms apply to him when he chooses to exercise the right given to him by the Act, for those rules apply to the advocates of those High Courts.
This again, I conceive, is taking a narrow view of the matter.
The rules of the High Court certainly apply to the advocates entitled to practise in that High Court and when an Act invests an advocate, who is not an advocate of a particular High Court, with the right to practise in that High Court, for all intents and purposes such an advocate becomes, as it were, a statutory advocate of that High Court and as such becomes invested with the rights as well as the obligations of an advocate of that, Court.
In other words, the Act proprio vigore makes him a person entitled to practise in that Court and as such amenable to and governed by all the rules applicable to and regulating the practice of persons entitled 'to 89 practise in that Court, except, of course, such of the rules as are contrary to, i.e., destructive of this new statutory right and which must, therefore, as regards him, be deemed to be inoperative.
Surely the Supreme Court advocate cannot practise in vacuo.
To accede to the contention of the petitioner is to say that a body of professional men, namely, the Supreme Court advocates, have been let loose "to practise", i.e., to "act and plead" ' in all High Courts in all their jurisdictions untramelled by any rules of practice a proposition which, in my opinion, ha , only to be stated to be rejected.
It is fraught with grave dangers and, at any rate, will inevitably lead to practical inconvenience and to no end of utter confusion.
If that view were accepted the Supreme Court advocate will be entitled to walk in and walk out of the High Court in any costume that his fancy may choose.
He may throw to the winds the rules of precedence of advocates including that of the Advocate General.
According to the rules of the Original Side of Calcutta an attorney is authorised to cause service of notice of motion and chamber summons but the opposite party will not be bound to accept service from the Supreme Court advocate who is not so authorised.
According to the Calcutta Original Side rules an attorney is personally responsible for the requisition fees, deposition fees etc.
, but a Supreme Court advocate acting in the Original Side will not be so responsible at all.
Nor will the High Court be able to get at the Supreme Court advocate to realise the fees if he is not to be governed by the rules governing the conduct of persons who act the Original Side. ' The attorneys acting in the Original Side cannot charge the client with a pice over and above the fees prescribed in the rules of taxation as between attorney and client but a Supreme Court advocate acting in the Original Side, not being in terms bound by the taxation rules, will be free to fleece the client to any extent he can.
The attorneys being officers of the Court are under the rules and the Letters Patent amenable to the disciplinary jurisdiction of the High 90 Court but a Supreme Court advocate may with impunity snap his fingers at the High Court, for under no provision of law as it exists except section 2 of the Act can the High Court exercise disciplinary jurisdiction such advocates.
It is unnecessary to multiply instances of confusion.
This one consideration of inconvenience and confusion is enough to discard the construction sponsored by the petitioners ' for the true rule of construction is that if two constructions are possible, that which leads to absurdity and brings about practical inconvenience and encourages confusion and chaos must be eschewed.
Neither of the two constructions suggested by me will have any such consequence and either of them will make the section workable in practice and at the same time accomplish a considerable measure of unification of the Indian Bar.
The petitioners see the difficulty and to get over it suggest that the Supreme Court advocate practising in a High Court will and can be bound by the existing ordinary rules of practice except those that prevent him from acting and pleading or that the High Court may frame separate rules for the Supreme Court advocates practising before them.
This very concession at once gives away the whole case of the petitioners.
As I have already stated clause 9 of the Letters Patent empowers the High Courts to approve, admit and enrol advocates, vakils and attorneys and such advocates, vakils and attorneys I emphasise the word " such "are authorised to appear in the High Courts and to plead or to act or to do both according to the rules made by the High Courts.
The High Courts ' rule making power as to enrolment of advocates, vakils and attorneys and their respective functions and powers is thus quite clearly confined to advocates, vakils and attorneys admitted and enrolled by them and does not and cannot extend to Supreme Court advocates who are not their rolls.
Section 119 of the Code of Civil Procedure excludes the application of the rules of practice relating to advocates and pleaders from Original Side of High Courts unless adopted by them by rules framed 91 under the Letters Patent which,as already stated, governs only their own advocates.
The Supreme Court of India, under article 145, can only make rules for regulating generally the practice and procedure of the Supreme Court including rules as to the persons practising before it.
That article does not authorise the Supreme Court to make rules regulat ing the practice and procedure of High Courts or the conditions subject to which the Supreme Court advocates may practise before the High Courts.
The Act we are considering does not confer any power the High Courts to frame rules subject to which the Supreme Court advocates shall exercise in the High Court their newly acquired statutory right under this Act.
The Bar Councils ' rule making power under section 15 is limited only to High Court advocates, clause (b) having been superseded by, section 2 of this Act.
There is, therefore, no provision of law except section 2 itself which will enable the High Courts to prescribe any rules of conduct 'for the Supreme Court advocates or to oblige them to conform to any rule of practice when they go to practise in any High Court.
Therefore, if we accept either of the two constructions suggested by me it will prevent this absurd and undesirable result, for then the Supreme Court advocates when they go 'to practise in any High Court will appear and plead or, alternatively, do what an.
advocate of the High Court can do, and in either case be subject to the relevant rules by which the advocates of the particular High Court are bound.
If that were not the meaning of section 2, then the Supreme Court advocates will be untrammelled by any rule of practice at all.
Further, the petitioners ' construction, even if the High Courts have power to make rules with regard to Supreme Court advocates practising before them, any the least obligation or restriction imposed by such rules the Supreme Court advocates by way of making them personally liable for any fees etc., or bringing them under the disciplinary jurisdiction or the High Courts will certainly be 92 challenged as a fetter placed their statutory right to practise, in the High Court and as such not binding ton them.
Finally there will be two sets of rules, namely, the existing rules governing the attorneys who act the original Side and some new rules to be made for the supreme Court advocates who may choose to act the Original Side.
The resulting creation of a now and distinct class of actors in the Original Sides of the two High Courts will indeed be a sad commentary the supposed intention of the Legislature to achieve uniformity and unification of the Indian Bar.
The petitioners ' construction must, therefore, be rejected.
It is next said that this alternative construction the rights of a Supreme Court advocate will vary from High Court to High Court and that will not be con sistent with the policy of uniformity underlying the Act.
In the first place it is an assumption, without any warrant, that the Act was out to achieve perfect symmetry and uniformity of the kind which we may consider desirable.
Secondly,no serious inconvenience will follow if the rights of a Supreme Court advocate vary from High Court to High Court.
The status and rights of advocates of different High Courts do vary under their respective rules and such variation has existed of or long time without any inconvenience.
This Act does not at all purport to eliminate those differences amongst the advocates of the different High Courts which will yet continue.
The construction sought to be put the section by the petitioner Aswini Kumar Ghosh will, therefore, only create fresh differences by bringing into being a new variety of practitioners who will have yet different rights in all the High Courts.
the other hand, the construction suggested above will cause the least possible inconvenience and at the same time remedy the long , standing grievance of advocates of High Courts account of the bar against their " appearing and pleading" in High Courts of which they are not advocates by authorising them, after being enrolled as Supreme Court advocates to do so as of right and 93 without the necessity of their obtaining the sanction of the Chief Justices of the High Courts concerned.
The Act permits a well defined body of professional men, namely, the Supreme Court advocates, to exercise the profession of an advocate in any High Court.
That this certainly was a forward step in achieving uniformity cannot possibly be denied.
Nothing more was within the purview of the Act as expressed in its full title and the non obstante clause.
Finally, reference is made to the proviso as it now appears in section 2 and it is claimed that the word "practise" in the operative part of the section must mean "appear, act and plead" because that word as appearing in the proviso obviously has that meaning, and reliance is placed the rule of construction that the same word should be given the same meaning wherever it occurs in the Act.
All that this proviso says is that nothing in this section shall be deemed to entitle a post Constitution Judge who might be an advocate of the Supreme Court to practise in a High Court of which he was at any time a Judge, if he had given an undertaking not to practise there after ceasing to hold office as such Judge.
In other words, all that the proviso does is to say that the right created by the section shall not extend to a Tudge if he had given an undertaking not to practise in that Court.
In the first place this proviso was wholly redundant in view of the constitutional prohibition contained in article 220.
Further, the language of the proviso is inept in that it seems to suggest that if such a Judge had not given an undertaking he would be free to practise which certainly is contrary to article 220.
Finally there is no difficulty in giving to the word "practise" occurring in the proviso the same general meaning given to that word in the operative part of the section, namely, "to exercise the profession".
It is said that if the words "to practise" mean only "to plead", then a post Constitution Judge after his retirement would be entitled "to act" in the High Court of which he was at any time a Judge.
There is no force in this argument because such lb Judge 94 will be prevented from acting and pleading anywhere by virtue of the provisions of article 220 of the Constitution.
It is, therefore, not necessary to give the word "practise" the wider meaning contended for by the petitioner Aswini Kumar Ghosh.
We must also remember that the general rule relied upon may be excluded by the subject,or context.
For reasons stated above, whether we adopt one or the other method of construction suggested above, in my opinion,, this petition cannot succeed and must be dismissed.
Appeal allowed.
Agent for Intervener No. 1 : P. K. Mukherjee.
Agent for Intervener No. 2: Sukumar Ghose.
Agent for Intervener No. 3: I N. Shroff, for P. K. Bose.
Agent for Intervener No 4: Bajinder Narain.
| Section 2 of the Supreme Court Advocates (Practice in High Courts) Act, 1951, provided that "notwithstanding anything contained in the (XXVIII of 1926), or any other law regulating the conditions subject to which a person not entered in the roll of advocates of a High Court may be permitted to practise in that High Court every advocate of the Supreme Court shall be entitled as of right to practise in any High Court whether or not he is an advocate of that High Court " : Held by the Court (PATANJALI SASTRI C.J., VlvIAN BosE, and GHULAM HASAN JJ.
MUKHERJEA and DAS JJ.
dissenting) The practice of law in India generally involves the exercise of both the functions of acting and pleading behalf of litigant parties, and when section 2 of the abovesaid Act conferred upon an advocate of the Supreme Court the right to " practise " in any High Court, it is legitimate to understand that expression as authorising him to appear and plead as well as to act behalf of suitors in all the High Courts including the Original Side thereof.
It is fallacious to relate that expression as applied to an advocate either, the one band, to the court in which the advocate is enrolled, or,, the other, to the court in which he seeks to exercise the statutory right conferred him.
It must be related to the general constitution of the Bar in India as a single agency in dealing with the litigant public.
A rule made by a High Court which denies to an ' advocate the right; to exercise an essential part of his function by insisting a dual agency the Original Side is much more than, a rule of practice and constitutes a serious invasion of his statutory right to practise, and the power of making such a rule, Unless expressly reserved (as it 'was reserved by the Bar Councils Act) would be repugnant, to the right conferred by section 2; and as the, Act does not reserve any such power, the statutory right, of a Supreme Court advocate under section 2 to plead as well as 'to act in the High Courts of Calcutta, and Bombay in the exercise 2 of their Original Jurisdiction can not be taken away or curtailed by the rules of those courts, and any rule which the Calcutta High Court may have made in the past purporting to exclude any advocate from practising the Original Side or from appearing and pleading unless he is instructed by an attorney cannot affect such right.
MUKHERJEA J.
The word " practise" when used with reference to an advocate is an elastic expression having no rigid or fixed connotation and the precise ambit of its contents can be ascertained only by reference to the rules of the particular forum in which the profession is exercised.
When a. 2 of the Supreme Court Advocates (Practice in High Courts) Act, 1951, speaks of a Supreme Court advocate being entitled as of right to practise in any High Court, what it actually means is that he would be clothed by reason of this statutory provision with all the rights which are enjoyed by an advocate of that court, and his right to plead and to act would depend the Bar Councils Act and the rules validly framed by that court, subject to this that no rule or provision of law would be binding which would affect in any way his statutory right to practise in that court solely by reason of his being enrolled as an advocate of the Supreme Court.
DAS J. The words "to practise", used in relation to lawyers as a class, mean "to exercise their profession" which is their dictionary meaning and which is wide enough to cover the activities of the entire genus of lawyers.
They are words of indeterminate import and have no fixed connotation or content.
In their application to particular species of lawyers their meaning varies according to the scope and ambit of the profession of the particular species in relation to whom they may be used and such meaning has to be ascertained by reference to the subject or context.
A Supreme Court advocate being entitled only,"to appear and plead" in that court, when section 2 autborised him to practise" in any High Court it must be taken, to have meant that he was authorised to do in the High Courts all that he was entitled to do in the Supreme Court, namely, to appear and plead only.
Alternatively the section must be taken to authorise every Supreme Court advocate to practise as of right in any High Court as advocates of that High Court do and the exercise of the profession of an advocate in a High Court by a Supreme Court advocate must involve the observance of the rules of practice of that High Court except to the extent they are abrogated by section 2.
That sec tion has made the Supreme Court advocate a statutory advocate ' of the High Court where he goes to practise and as such he is bound by the rules of such High Court except, such of them as are contrary to this new statutory right.
Whichever of the two constructions is adopted, a Supreme Court advocate cannot appear in the Original Side of the Calcutta or Bombay High Courts unless he is instructed by an attorney.
Queen vs Doutre (L.R. 9 App.
Cas. 745), Powers of Advocates, ln re (I.L.R. and Laurentius Ekka vs Dukhi Koeri (I.L.R. 4 Pat. 766) referred to.
3 Per PATANJALI SASTRI C.J., VIVIAN BOSE, and GHULAM HASAN JJ.
The non obstante clause in section 2 can reasonably be read as overriding "anything contained" in any relevant existing law which is inconsistent with the new enactment.
Sections 9(4) and 14(3) of the Bar Councils Act and section 2 of the new Act cannot stand together.
Whether by force of the non obstante clause liberally construed or of the well established maxim of construction that the enacting part of an Act must, when it is clear, control the non obstante clause when both cannot be read harmoniously, the new Act must have the effect of abrogating the powers reserved and continued in the High Courts by sections 9(4) and 14(3) of the Bar Councils Act .
MUKHERJEA and DAS JJ.
The non obstante clause in section 2 of the said Act removes only those provisions contained in the Bar Councils Act, 1926, and in any other law, which regulate the conditions subject to which a person not entered in the roll of advocates of a High Court may be permitted to practise in that High Court.
Other provisions contained in the Bar Councils Act or other statutes, which lay down the conditions under which an advocate enrolled in the High Court is entitled to practise in the Original Side of that court stand unaffected by the Act.
Even if the entire Bar Councils Act is excluded for the purpose of section 2, the rules framed by the Calcutta and Bombay High Courts under their Letters Patent would remain valid and effective of their own force even without the saving provision contained in the Bar Councils Act and the Letters Patent would also remain in full force.
Per PATANJALI SASTRI C. J., MUKHERJEA, DAB, VIVIAN BosE, and GHULAM HASAN JJ.
Speeches made by members of the House of Parliament the floor of the House are not admissible as extrinsic aids to the interpretation of statutory provisions.
State of Travancore Cochin and Another vs Bombay Co. Ltd. etc, ([1952] S.C.R. 1112), Administrator General of Bengal vs Prem Lal ( [1895] 22 I.A. 107), Krishna Aiyangar vs Nella Perumal ( [1920] 47 I.A. 33), A.K. Go`alan vs The State of Madras ( ; and Debendra Narain Roy vs Jogesh Chandra Deb (A.I.R. referred to.
Held per PATANJALI SASTRI C.J., DAs, VIVIAN BOSE and GHULAM HASAN JJ.
The statement of objects and reasons annexed to a Bill, the form of the original Bill and the fact that certain words: or phrases were added to or omitted from the original Bill are also not admissible as aids to the construction of a, statute.
MUKHERJEA J. Judicial opinion the point whether in construing a statute the, statement of objects and reasons or the original form of the Bill or reports of committees can be referred to is not uniform.
English Courts and the Privy Council have laid down that such extrinsic aids must be dismissed from consideration.
But there are American decisions to the effect that the general history of a statute and the various steps leading up to an enactment including amendments or modifications of the original Bill and reports of Legislative Committees can, be looked I at for 4 ascertaining the intention of the legislature where it is in doubt.
The legislative history is, however, clearly inadmissible where there is no obscurity in the meaning of a statute.
Per MUKHERJEA and DAS JJ.
Punctuation is after all a minor element in the construction of a statute, and even if the orthodox view that it forms no part of the statute is to be regarded as of imperfect obligation and it can be looked at as contemporanea, expositio, it is clear that it cannot be allowed to control the plain meaning of a text.
Stephenson vs Taylor ( [1861] 1 B.S. 101), Clawdon V. Green , Duke of Devonsshire vs Conor (L.R. , Maharani of Burdwan vs Murtanjoy Singh ([1886] 14 I.A. 30), Pugh vs Ashutosh Sen ( (1928]55 I.A. 63) referred to.
Judgment of the Calcutta High Court reversed.
|
Appeal No. 73 of 1950.
Appeal from the Judgment and Decree dated the 26th January, 1944, of the High Court of Judicature at Patna (Fazl Ali C. J. and Chatterji J.) in Appeal from Original Decree No. 4 of 1941, arising out of Judgment and Decree dated the 20th September, 1940, of the Court of the Additional Subordinate Judge of Hazaribagh in Title Suit No. 45 of 1939.
section N. Mukherjee for the appellant.
Gangacharan Mukherjee and A. N. Sinha for the respondents.
October 23.
The judgment of the Court was delivered by BHAGWATI J, 110 BHAGWATI J.
The judgment of the Court was delivered by BHAGWATI J.
110 BHAGWATI J.
The question that arises for our consideration in this appeal is whether prior to the enactment of section 65 A of the Transfer of Property Act in 1929 a mortgagor in possession had the power to grant a permanent lease of the mortgaged property so as to bind the mortgagee.
One Raja Nilkanth Narain Singh was the owner of Gadi Sirampur and he executed the 1st August, 1914, a simple mortgage of Gadi Sirampur in favour of the Chota Nagpur Banking Association Limited.
In 1920 the Bank filed a suit against his son Wazir Narain Singh to enforce the mortgage security and obtained a mortgage decree the 29th November, 1921.
The Bank purchased a third share of Gadi Sirampur in execution of that decree the 28th October, 1922.
Proceedings were taken to set aside this sale.
During the pendency of these proceedings it appears that the 5th November, 1925, Wazir Narain Singh granted a permanent lease of four villages Nawadih, Koldih, Pandna and Chihutia by a registered Patta to one Hiraman Ram who was the Manager and Karta of his joint Hindu family.
The Permanent lease was taken by him in his own name and in the name of his son Chohan Ram.
An agreement was subsequently arrived at between the Bank and Wazir Narain Singh that if Wazir Narain Singh paid to the Bank or before the 16th August, 1926, the sum of Rs. 1,10,631 4 0 the sale would be set aside.
Wazir Narain Singh executed the 14th August, 1926, a mortgage of Gadi Sirampur in favour of the Manager of the Court of Wards in charge of the plaintiff 's estate during his minority to secure repayment of a sum of Rs. 1,47,000 and out of the same satisfied the dues of the Bank and the sale in favour of the Ban was accordingly set aside.
The plaintiff through the Manager of the Court of Wards filed a suit the 4th February, 1929, to enforce this mortgage and he impleaded as co defendants in that suit Hiraman Ram as defendant 20 and his father Dilo Ram as defendant 19.
A final decree for sale was passed the 18th September, 1931, and the 111 Plaintiff purchased Gadi Sirampur at the auction sale held in execution of this decree the 6th April, 1935.
Delivery of possession was obtained by the plaintiff through the Court the 16th February, 1936.
Dilo Ram died after the mortgage decree but Hiraman Ram and his son Chohan Ram continued in actual possession of the disputed villages and the plaintiff therefore filed the 16th November, 1939, the suit, out of which this appeal arises, in the Court of the Additional Subordinate Judge of Hazaribagh against Hiraman Ram and Chohan Ram, defendants 1 and 2, for khas possession of these villages.
The plaintiff contended that he was subrogated to the position of the Bank, that the decree which had been passed in the mortgage suit was binding the defendants, that he was the auction purchaser in execution of that mortgage decree and that the Patta being subsequent to the plaintiff 's mortgage thus came to an end and he was entitled to recover khas possession from the defendants.
Defendant 2 filed his written statement contesting the plaintiff 's claim.
He denied that the plaintiff.
was subrogated to the position of the Bank.
He contended that the decree in the mortgage suit was not binding him as he was not :a party to that suit.
lie further contended that the Patta could not be put an end to by the auction sale of the mortgaged property.
The defendant I filed a separate written statement.
He denied that he was the Manager and Karta of the joint Hindu family.
He also contended that there was a partition amongst the members of the joint family within a year after their possession of the properties in suit and the properties had been allotted at that partition to the defendant 2.
The trial Court hold that, the plaintiff was subrogated to the position of the Bank.
It also held that the defendant 1 was the Manager and Karta of the joint family and that the defendant 2 was fully represented in the mortgage suit, that the decree in the mortgage suit was binding the defendants and that the plaintiff was entitled to recover possession 112 of the said properties and mesne profits from the defendants.
The defendants appealed against this decree to the High Court of Judicature at Patna.
The High Court negatived the contention in regard to constructive res judicata which was urged behalf of the plaintiff.
It then considered the further contention that Wazir Narayan Singh had, after creating the mortgage in favour of the Bank no power to grant the permanent lease in question to the defendants.
After considering all the authorities which were cited before it, it came to the conclusion that the question whether Wazir Narayan Singh had got such power or not had to be determined with reference to the provisions of section 66 of the Transfer of Property Act and the crucial test was whether the lease rendered the mortgagee 's security insufficient.
In spite of the fact that there was no allegation in the plaint that the defendant 's lease had the effect of rendering the security of the Bank insufficient, the High Court went into this question and a calculation of some figures came to the conclusion that the lease of the disputed villages in favour of the defendants did not in any way render the security of the bank insufficient.
It therefore held that the lease was valid and was not affected by the plaintiff 's mortgage, decree or by the execution sale under that decree and accordingly dismissed the plaintiff 's suit.
The plaintiff obtained leave to appeal to the Privy Council from this decision of the High Court and the appeal was admitted the 9th January, 1946.
Both the Courts below found that the plaintiff was subrogated to the position of the Bank.
They also found that the defendant 2 was sufficiently represented in the mortgage suit.
These findings were not challenged before us and the only question which survived for our consideration was whether Wazir Narayan Singh had the power to grant a permanent lease to the defendants so as to bind the plaintiff.
The question whether Wazir Narayan Singh had such power has got to be determined under the law as it stood prior to the enactment of section 65 A of 113 the Transfer of Property Act by Act XX of 1929.
The mortgagor 's power to lease the mortgaged property was the subject matter of conflicting judicial decisions.
Relying upon the rule of English common law under which the mortgagor had no power to lease, it was held in some cases that a mortgagor could not ordinarily without the concurrence of the mortgagee execute a lease which could be binding the mortgagee.
In other cases a distinction was drawn between English mortgages and other mortgages and it was considered that the mortgagor in India remained the owner and when in possession could prima facie exercise the rights of ownership inclusive of the power to grant leases of the mortgaged property.
The Question was decided with reference to section 66 of the Transfer of Property Act and it was held that the mortgagor could grant leases which were not wasteful in their effect the mortgagee 's security.
This was the principle deduced by Jenkins C.J. in Balmukund vs Motilal(1) from the old case of Banee Pershad vs Beet Bhunjun Singh(1).
This line of reasoning was not adopted in other cases which laid down a different rule, viz., that a mortgagor in possession might grant a lease conformable to usage in the ordinary course of management but was not competent to grant a lease unusual terms or authorise the use of land in a manner, or for a purpose, different from the mode in which he himself had used it before he granted the mortgage.
This was laid down by Sir Ashutosh Mukherjee J. in Madan Mohan Singh vs Raj Kishore Kumari(3)and was followed in a number of cases.
There was thus a conflict of decisions which was sought to be resolved by the enactment of section 65 A of the Transfer of Property Act which dealt with the mortgagor 's power to lease while lawfully in possession of the mortgaged property.
"It is an elementary rule that though a mortgagor may assign the mortgaged premises, the assignee can only take subject to the encumbrances, and if the (1) (2) (i868) (3) (i9i6) 114 property is sold or foreclosed by the mortgagee, any interest which the mortgagor may have created since the mortgage will be destroyed" '.
(Ghosh Mortgage, Vol.
I, p. 212.) As was observed by Lord Selborne in Corbett vs Plowden(1), "If a mortgagor left in possession, grants a lease without the concurrence of the mortgagee (and for this purpose, it makes no difference whether it is an equitable lease by an agreement under which possession is taken or a legal lease by actual demise), the lessee has a precarious title, inasmuch as although the lease is good as between himself and the mortgagor who granted it, the paramount title of the mortgagee may be asserted against both of them.
" It does not however follow that a lessee from the.
mortgagor acquires no interest whatever in the property demised to him.
A person taking a lease from a mortgagor after the mortgage does acquire an interest in the equity of redemption and can claim to redeem that footing.
But this right of redemption does not necessarily mean that a lease of this character is always operative against the mortgagee.
Merely because a lessee acquires an interest in the mortgaged property which is sufficient to enable him to redeem the mortgage it does not follow that the interest which the lessee has thus acquired is operative against the mortgagee.
The true position is somewhere in the middle of these two extremes.
The mortgagee is not normally bound by the acts of the mortgagor with reference to the mortgaged property. " But if a mortgagee takes his security with knowledge of the purposes to which the land is applied and allows the mortgagor to remain in possession he *ill be bound by the acts done by the mortgagor in accordance with the usual course." (Ghosh Mortgage, Vol.
I, p. 212.) As indicated in the observations of Sir James Parke in Pope vs Briggs (2) the mortgagor might be considered as acting in the nature of a bailiff or agent for the mortgagee.
Con sequently, if the mortgagor, after he has granted the (1) at p. 681.
(2) (1829) 9 Barn.
& Cres.
245 at p. 258. 115 mortgage, deals with the property in the usual course of management, the interest created by him may be rightly deemed operative against the mortgagee.
An illustration of this view is found in the ease of Moreland vs Richardson(1) where a person took a mortgage of a burial ground and it Was held that, as the object of the burial ground is to grant rights of burial, this ' being the mode in which such property is dealt with, the mortgagee was not entitled to disturb the graves of those who had been: buried the land, while the mortgagor continued to hold it.
, The mortgagor could thus in the usual course of management create a ten ancy from year to year in the case of agricultural land or from month to month in the case of property consisting of houses and his dealings with the mortgaged property in the usual course of management would be operative against the mortgagee.
[Per Mukherjee J. in Madan Mohan Singh vs Raj Kishore Kumari(2)] "Whether the mortgagor possesses any larger powers of leasing is however very questionable.
The only reported case in which such a power was recognized is Banee Pershad vs BeetBhunjun Singh(1) but the report in Sutherland is very meagre.
The judgment too does not give forth any certain sound (sic.).
It is only said that a mortgagor is not restricted in the management of the property by making a mortgage and that so long as nothing takes place to impair the value of the mortgagee 's security the mortgagor does not exceed his powers in making a lease for a term.
The learned judges add perhaps somewhat unnecessarily that their decision should not go beyond the particular facts of the case before them." (Ghosh Mortgage, Vol.
I, p. 213.) This case of Banee Pershad vs Beet Bhunjun Singh(3 was considered by Jenkins C. J. in Balmukund vs Motilal(4) as an authority for the proposition that as long as nothing took place which impaired the value or impeded the operation of the mortgage, the mortgagor in creating a temporary lease acted within his powers and these observations of Jenkins C.J. were (1) ; (2) at pp.
91, 92.
(3) (4) , 116 considered by the Courts as justifying the applicability of the provisions of section 66 of the Transfer of Property Act while determining the binding nature of the leases created by.
the mortgagor in possession the mortgagee.
; Mukherjee J. had occasion, to consider this very case in Madan Mohan Singh vs Raj Kishore kumari(1) and he cited it in support of the proposition that the interest created by the mortgagor while dealing with the mortgaged property in the usual course of management could be rightly deemed operative against the mortgagee.
The following observations of Mukberjee J. in this connection at page 91 are very apposite: "As the case is very imperfectly reported, we have examined the record and ascertained the questions in controversy.
The proprietor of an estate mortgaged it the 12th March, 1861.
the 7th July, t862, the mortgagor granted an ijara potta of the property for a term of ten years.
The mortgagee subsequently sued the mortgagor alone and got a decree; at the execution sale which followed, the property was sold the 24th December, 1863.
The purchaser sued the 12th March, 1867, to eject the lessee, the ground that as he had acquired the property in the condition in 'Which it was when mortgaged, the lease, which would otherwise run till the 7th July, 1872, did not bind him. 'The Court of first instance overruled this contention 'as too broadly formulated, and held that as the mortgagor had in good faith granted the lease for a limited term a fair and reasonable rent, the mortgagee or the purchaser in execution of his decree could not repudiate it, specially as the mortgage deed did not prohibit the grant of temporary leases to middlemen or cultivators.
appeal, the District Judge affirmed this view and declined to accept the broad contention that leases of all descriptions granted by a mortgagor were void as against the mortgagee.
second appeal to this Court, Jackson and Mitter JJ.
took substantially the same view.
" (1) 117 These observations of Mukherjee J. point out what was the ratio decidendi of that case.
The question of the sufficiency or insufficiency of the security was not really gone into but the Court considered that the lease was granted in good faith, was for a limited term and stipulated a fair and reasonable rent and it was therefore operative against the mortgagee.
The Court was really guided by the consideration that the mortgagor dealt with the property in the usual course of management and the interest which was thus created by the mortgagor in the usual course must rightly be deemed operative against the mortgagee. ,The case of Banee Pershxd vs Beet Bhunjan Singh(1) therefore is really no authority for the wide proposition that a mortgagor was not restricted in the management of the property by making a mortgage and that so long as nothing took place,to impair the value, or impede the operation of the mortgage the mortgagor would be well within his powers in making a lease for a term.
In our opinion section 66 of the Transfer of Property Act has nothing to do with the mortgagor 's power to lease the mortgaged property.
Section 66 is a statutory, enactment of the powers of the mortgagor in.possession in regard to waste of mortgaged property.
The mortgagor in possession is not liable for what in terms of the English Law of Real Property is known as permissive waste, i.e., for omission to repair or to prevent natural deterioration.
He is however liable for destructive waste is acts which are destructive or permanently injurious to the mortgaged property if the security was insufficient or would be rendered insufficient by such acts.
This section therefore has no application to the grant of a lease by the mortgagor in possession.
The only relevant consideration is whether, the mortgagor in possession having the authority to deal with the property in the usual course of management, the lease granted by him can be rightly deemed operative against the mortgagee.
, The true position has been stated in the following terms by,, Mukherjee, in Madan Mohan Singh vs Baj Kishore Kumar(2) (i) 16 (2) at page 92.
118 "The true position thus is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management, for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses.
But it is not competent to the mortgagor to grant a lease unusual terms, or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used it before he granted the mortgage.
" The question whether the mortgagor in possession has power to lease the mortgaged property has got to be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management.
It has to be determined general principles and not the distinction between an English mortgage and a simple mortgage or con siderations germane to section 66 of the Transfer of Property Act.
Having regard therefore to the position that section 66 has no application to leases of the mortgaged property, the decision of Jenkins C.J. in Balmukund vs Motilal(1) and the cases following that line of reasoning do not govern the question before us.
While we are this subject we would like to em phasise that it is for the lessee if be wants to resist the claim of the mortgagee to establish that the lease in his favour was granted the usual terms in the ordinary course of management.
Such a plea if established and it must not be overlooked that the burden of proof in this matter is upon him would furnish a complete answer to the claim of the mortgagee.
If the lessee failed to establish this position he would have certainly no defence to an action at the instance of the mortgagee.
No allegation was made behalf if of the defendants that the grant of the permanent lease was a dealing with the mortgaged property in the usual course of management by the mortgagor, In the absence of (9) , 119 any such plea we are of the opinion that there was No. answer to the plaintiff 's claim and the permanent lease granted by Wazir Narayan to the defendants could not prevail against the plaintiff.
We have therefore come to the conclusion that Wazir Narayan Singh had no power to grant the permanent lease in question to the defendants, that the same was not binding and operative against the plaintiff, that the defendants had ample opportunity to@ redeem the mortgage if they so desired but did not choose to exercise their right of redemption, that the execution sale of Gadi Sirampur including the four villages in question was binding them and that the plaintiff was entitled to khas possession of the four villages of which the defendants were in wrongful possession.
The appeal is allowed.
The decree passed by the High Court dismissing the plaintiff 's suit is set aside and the decree passed by the trial court in favour of the plaintiff is restored with costs throughout.
Appeal allowed.
Agent for respondent No. 1: B. B. Biswas.
| Under the law as it stood prior to the enactment of section 65 A of the Transfer of Property Act, by Act XX of 1929, the question whether the mortgagor in possession had powar to lease the mortgaged property has got to be determined with reference to the 109 authority of the mortgagor as the bailiff or agent of the mortgagee to deal with the property in the usual course of management.
It has to be determined general principles and not the distinction between an English mortgage and a simple mortgage or the considerations germane to s.66 of the Transfer of Property Act, and the true position is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management; for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses.
But it is not competent to him to grant a lease unusual terms or to alter the character of the land or to authorise its use in a manner, or for a purpose, different from the mode in which he himself had used it before he granted the mortgage.
And it is for the lessee, if he wants to resist the claim of the mortgagee, to establish that the lease in his favour was granted the usual terms in the ordinary course of management.
Where a mortgagor granted a permanent lease of the mortgaged property in the year 1925 and the High Court upheld the lease as against a person who had purchased the properties in a sale held in execution of a decree obtained by the mortgagee the mortgage, the ground that the lease did not impair the security of the mortgagee: Held, that the lease was not binding the mortgagee or the auction purchaser as it was not a lease granted in the usual course of management, even though it did not impair the security.
Madan Mohan Singh vs Raj Kishore Kumari , approved.
Balmukund vs Motilal (1915) 20 C.W.N. 350, dissented from.
Banee Prasad vs Beet Bhunjun Singh , explained.
|
Appeal No. 166 of 1951.
Appeal from the Judgment and Decree dated September 15, 1948, of the High Court of Judicature for the State of Punjab at Simla (Mahajan and Teja Singh JJ.) in Regular Second Appeal No. 1844 of 1945 from the Judgment and Decree dated June 5, 1945, of the Court of the District Judge, Gurgaon, in Civil Appeal No. 171 of 1943, arising out of the Judgment and Decree dated August 27, 1943, of the Court of the Subordinate Judge, Gurgaon, in Civil Suit No. 11 of 1943.
Tarachand Brijmohanlal for the appellant.
Gurubachan Singh (Radha Krishan Aggarwal, with him) for the respondent.
1952, November 7.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
The plaintiffs, Joti Prasad and Sat Narain, sued for partition and possession of their two fifths share in the suit properties alleging that the first defendant wag alone in possesSion of the same, having redeemed a mortgage executed by the joint family of which the plaintiffs and defendants were members, in favour of one Raghumal in the year 1896 on paying Rs. 5,800.
Defendants 2 to 5 were impleaded as co sharers.
Out of them, defendants 2 and 3 admitted the claims of the plaintiffs.
Defendant 4 died pending suit, and her name was struck off.
Defendant 5 supported the first defendant.
On the date of the trial court 's decree, the two plaintiffs were held entitled to one sixth share each.
The first defendant resisted the plaintiffs ' claim.
He contended that the redemption by him in 1920 was not on behalf of the joint family as alleged by the plaintiffs but on his own account as there had been a disruption of the joint family status much earlier, and that before the plaintiffs could get arty relief, they were bound to pay him not merely a proportionate share in the sum of Rs. 5,800 which he paid to the mortgagee for redemption but their share in the original mortgage debt of Rs. 11,200.
He also denied that the original mortgage was executed on behalf of the joint family.
The Subordinate Judge, and on appeal, the High Court found that the original mortgage was a mortgage transaction of the joint family, and that the first defendant, Ganeshi Lal, redeemed the mortgage on his own account and for his own benefit at a time when there was no longer any joint family in existence.
It was further held by the trial court that the plaintiffs and other co sharers were bound to pay their proportionate share of the amount paid by the first defendant to redeem the mortgage, namely, Rs. 5,800.
But from this a sum of Rs. 1,200 which he had already received by way of redemption of certain mortgage rights had to be deducted.
The District Judge enhanced this sum of RS.
4,600 to 245 Rs. 5,000, as the first defendant had paid taxes due on the property up to 1940, but he confirmed the main findings of the Subordinate Judge.
A second appeal preferred by the first defendant was dismissed by the High Court at Simla (Mehr Chand Mahajan and Teja Singh JJ.).
They repelled the contention of the first defendant that a suit for partition and possession was not maintainable without bringing a suit for redemption.
They also negatived his right to get a proportionate share in the amount of Rs. 11,200 due on the mortgage.
Two other learned Judges gave leave to appeal under section 109 (c) of the Civil Procedure Code, as a substantial question of law was involved.
Three points were argued before us by learned counsel for the appellant; firstly, there was an assignment of the mortgage in favour of the appellant with the result that the entire rights of the mortgagee vested in him; secondly, even viewing the question as one of legal subrogation, he was entitled, under the principles of justice, equity and good conscience which governed the State of Punjab, as the has not been applied to the State, to recover from the co mortgagors not merely their shares in the sum of Rs. 5,800 which he had paid for redemption but their shares in the full amount of Rs. 11,200 due under the mortgage; and thirdly, that the suit for partition without asking for redemption was not maintainable.
Points Nos. 1 and.
3 have no force whatever.
The registered deed of redemption does not contain any words of assignment.
To say that Ganeshi Lal shall be the owner of the entire amount due from the mortgaged property is something different from stating that the security has been assigned in his favour.
On the other hand, the endorsement of receipt of payment on the back of the mortgage deed itself and the statement of the mortgagee that he has released the mortgaged property from his mortgage go to show that there was no assignment.
246 The non maintainability of the suit does not seem to have been in issue either before the trial court or before the District Judge, and it appears to have been raised for the first time before the High Court.
It was pointed out by the learned Judges, and quite rightly, that so long as no question of limitation was involved, there was no objection to a claim for redemption and one for possession and partition being joined together in the same suit.
Only the second point remains for consideration, and this raises an interesting question of law.
It is not denied that Ganeshi Lal who redeemed the prior mortgage is subrogated to the mortgagee 's rights, but the controversy is about the extent of his rights as subrogee.
By virtue of the redemption, does he get all the rights of the mortgagee and hold the mortgage as a shield against the co mortgagors for the full amount due on the mortgage on the date of redemption whatever he may have himself paid to get it discharged, or does he stand in the mortgagee 's shoes only to the extent of getting reimbursed from the comortgagors for their shares in the amount actually paid by him? The lower courts have held that the latter is the correct position in law, but the appellant has challenged it as unsound.
The first two clauses of the present section 92 of the run in these terms: " Any of the persons referred to in section 91 (other than the, mortgagor) and any co mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee.
The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems.
" It is a new section and was inserted by the amending Act XX of 1929.
The original sections 74 and 247 75 conferred the right to redeem in express terms only on second or other subsequent mortgagees, though the co mortgagor 's right to subrogation on redemption was recognised even before the Act.
As the has not been extended to the State of East Punjab, it is unnecessary to decide whether section 92 is retrospective in its operation, on which point there has been a conflict of opinion between the several High Courts.
Section 95 of the Act which removed the confusion caused by the old section which, conferring on the co mortgagor what was called a charge, and thus seeming to negative the application of the doctrine of subrogation, is also inapplicable to the present case.
We therefore steer clear of sections 74 and 75 of the old Act and sections 92 and 95 of the present Act, and we are free to decide the question on principles of justice, equity and good conscience.
If we remember that the doctrine of subrogation which means substitution of one person in place of another and giving him the rights of the latter is essentially an equitable doctrine in its origin and application, and if we examine the reason behind it, the answer to the question which we have to decide in this appeal is not difficult.
Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it, and it is well recognised that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors.
Such being the legal position as among the co mortgagors, if one of them redeems a mortgage over the property which belongs jointly to himself and the rest, equity confers on him a right to reimburse himself for the amount spent in excess by him in the matter of redemption; he can call upon the co mortgagors to contribute towards the excess which he has paid over his own share.
This proposition is postulated in several authorities.
In the early case of Hodgson vs Shaw (1) Lord Brougham said: (1) ; ; 248 "The rule is undoubted, and it is one founded on the plainest principles of natural reason and justice, that the surety paying off a debt shall stand in the place of the creditor, and have all the rights which he has, for the purpose of obtaining his reimbursement.
" I have italicised the word " reimbursement Sheldon in his well known treatise on Subrogation has got the following passage in section 13 of the Second Edition: " There is another class of cases in which he who has paid money due upon a mortgage of land to which he had some title which might be affected or defeated by the mortgage, and who was thus entitled to redeem, has the right to consider the mortgage as subsisting in himself, and to hold the land as if it subsisted, until others interested in the redemption, or who held also the right to redeem, have paid a contribution.
" Be it noted that what is spoken of here is a contribution.
Dealing with the subject of subrogation of a, surety by payment of a promissory note and citing the observations of the Alabama Court, Harris says in his work on Subrogation (1889 Edition) at page 125: " The rule is, that a surety paying a debt, shall stand in the place of the creditor; and is entitled to the benefit of all the securities which the creditor had for the payment of the debt, from the principal debtors; in a word, he is subrogated to all the rights of the creditor; the surety, however, cannot avail himself of the instrument on which he is surety, by its payment.
By payment it is discharged and ceases to exist, and the payment will not, even in equity, be considered an assignment; the surety merely becomes the creditor of the principal to the amount paid for him.
" To compel the co debtors or co mortgagors to pay more than their share of what was paid to the creditor or mortgagee would be to perpetrate an inequity or 249 injustice, as it would mean that the debtor who is in a position to pay and pays up can obtain an advantage for himself over the other joint debtors.
Such a result will not be countenanced by equity; the favouritism shown by law to a surety, high as it is, does not extend so far.
The surety can ask to be indemnified for his loss: he can invoke the doctrine of subrogation as an aid to his right of contribution.
Sheldon says in section 105 of his book : " The subrogation of a surety will not be carried further than is necessary for his indemnity; if he buys up the security at a discount, or makes his payment in a depreciated currency, he can enforce it only for what it cost him.
He cannot speculate at the expense of his principal ; his only right is to be repaid.
" In section 178, Harris is still stronger. " Since subrogation is founded on principles of equity, the surety who would avail himself of the doctrine and invoke equity must do equity ; and while ' he is entitled to a reimbursement in all that he pays out properly for his principal, debt, interest and cost, he is not entitled, in any way to recover more than he has paid.
For instance, if he pays the debt of his principal, in depreciated currency, the rule would seem to be that he could demand from the principal only the value of that currency at the time he made the payment.
Nor would he upon principles of equity be permitted to purchase the debt at a discount and then be subrogated to collect the whole face value of the debt, and especially if he held securities, or if the creditor held securities which would fall into his hands, out of which to pay the debt; because the securities are trust funds for the purpose, and set aside for the payment of that debt and an assignee of trustee cannot speculate in the purchase of claims against the fund in his hands.
It would not be equality; it would not be equity.
" While it can be readily conceded that the joint debtor who pays up and discharges the mortgage 250 stands in the shoes of the mortgagee, and secures to himself the benefit of the security by such payment, the extent to which he can enforce his right as against the other joint debtors is a different matter altogether.
In his monumental work on Equity Jurisprudence, Pomeroy points out that he will be subrogated to the rights of the mortgagee only to the extent necessary for his own equitable protection.
(See page 632 of Volume IV of the Fifth Edition by Symons).
Clearer still is the passage found at page 640 of the same book: " The mortgagor himself who has conveyed the premises to a grantee in such manner that the latter has assumed payment of the mortgage debt becomes an equitable assignee on payment, and is subrogated to the mortgagee, so far as is necessary to enforce his equity of reimbursement or exoneration from such grantee.
" It is as regards the excess of the payment over his own share that the right can be said to exist.
Pomeroy says this at pages 660 and 661: "In general, whenever redemption by one of the above mentioned persons operates as an equitable assignment of the mortgage to himself, he can keep the lien of it alive as security against others who are also interested in the premises, and who are bound to contribute their proportionate shares of the sum advanced by him, or are bound, it may be, to wholly exonerate him from and reimburse him for the entire payment. .
The doctrine of contribution among all those who are interested in having the mortgage redeemed, in order to refund the redemptor the excess of his payment over and above his own proportionate share, and the doctrine of equitable assignment in order to secure such contribution, are the efficient means by which equity completely and most beautifully works out perfect justice and equality of burden, under these circumstances. . . . " Whatever the difference might be between the English law and the Indian law as regards the right 251 to enforce decrees and securities for the due payment of a debt in the case of a surety who discharges a simple money debt and a surety who pays up a mortgage, it is still noteworthy that Section V of the Mercantile Law Amendment Act of 1856 (England) provided for indemnification by the principal debtor( for the advances made and loss sustained by the surety.
There is a distinction in this respect between a third party who claims subrogation and a co mortgagor who claims the right, and this is brought out by Sir Rashbehary Ghose in his Law of Mortgage in India, Volume I, 5th Edition.
He says at page 354, pointing out that co mortgagors stand in a fiduciary relation : " I should add that an assignee of a mortgage is entitled, as a rule, to recover whatever may be due on the security.
But if he stands in a fiduciary relation, he can only claim the price which he has actually paid together with incidental expenses.
" The right of the co mortgagor who redeems the mortgage is spoken of as the right of reimbursement at page 372 in the following passage : "Strictly speaking, therefore, when one of several mortgagors redeems a mortgage, he is entitled to be treated as an assignee of the security which be may enforce in the usual way for the purpose of re imbursing himself.
" The redeeming co mortgagor being only a surety for the other co mortgagors, his right is, strictly speaking, a right of reimbursement or contribution, and in law, when we have regard to the principles of equity and justice, there should be no difference( between a case where he discharges an unsecured debt and a case where he discharges a secured debt.
It is unnecessary for us to decide in this appeal whether section 92 of the was intended to strike a departure from this position when it states that the co mortgagor shall have the same 252 rights as the mortgagee whose mortgage he redeems, and whether it was intended to abrogate the rule of equity as between co debtors, and provide for the enforcement of the liability on the basis of the amount due under the mortgage ; and this is because, as has been already stated, we are governed not by the statute but by general principles of equity and justice.
If it is equitable that the redeeming co mortgagor should be substituted in the mortgagee 's place, it is equally equitable that the other co mortgagors should not be called upon to pay more than he paid in discharge of the encumbrance.
In this connection, reference may be made with advantage to the decision of Sir Asutosh Mookerjoe and Teunon JJ.
in DigambarDas vs Harendra Narayan Panday (1) where the question arose as regards the the rate of interest and the period for which the redeeming co mortgagor would be entitled.
There is an elaborate examination of the nature of the right of subrogation obtained by one of several joint comortgagors who redeems the mortgaged property, and in the course of the discussion the following observations occur: " In so far as the amount of money which he is entitled to recover from his co mortgagors is concerned, he can claim contribution only with reference to the amount actually and properly paid to effect redemption to which sum he can add his legitimate expenses . .
The substitution, therefore, of the new creditor in place of the original one, does not place the former precisely in the position of the latter for all purposes. .
If therefore one of several mortgagors satisfies the entire mortgage debt, though upon redemption he is subrogated to the right and remedies of the creditor, the principle has to be so administered as to attain the ends of substantial justice regardless of form ; in other words, the fictitious cession in favour of the person who effects the redemption, operates only to the extent to which it is necessary to apply it for his indemnity and protection." (1) 258 There is a definite expression of opinion by the Madras High Court on the point in the decision reported in Suryanarayana vs Sriramulu(1).
In that case, a purchaser of a half share of the equity of redemption claimed to recover half of the amount of the mortgage on the security of the other share in the hands of the defendant, and it was held that as his purchase of the decree on the mortgage was prior to his purchase of the equity of redemption, he was entitled to the full amount claimed by him.
The learned Judges distinguish the case from one where one of two mortgagors discharges an encumbrance binding on both, and say that in such a case the mortgagor doing so could not recover from his comortgagors more than a proportionate share of the amount actually paid by him.
After this rather lengthy discussion of the subject, we consider it unnecessary to notice and comment on the several decisions cited for the appellant.
It may be said generally that they only lay down that in cases where the , as it stood originally or as amended in 1929, is not applicable, we are governed by the principles of equity, justice and good conscience, and that sections 92 and 95 embody such principles.
None of the cases deals with the extent or degree of subrogation, and there is nothing in them which runs counter to the view that the doctrine must be applied along with other rules of equity, so that the person who discharges the mortgage is amply protected, and at the same time there is no injustice done to the other joint debtors.
He who seeks equity must do equity, and we shall be violating this rule if we give effect to the appellant 's contention.
The High Court, in our opinion, reached the correct conclusion.
The parties are not agreed on the shares to which the plaintiffs are entitled, and this is because after the date of the final decree some of the branches have become extinct by the deaths of their representatives.
Whether under customary law in the Punjab, uncles (1) 254 exclude nephews or they take jointly, and whether succession is per stirpes or per capita, was the subject of disagreement at the Bar before us.
This question must therefore be left over for determination by the trial court, and the case will have to go back to that court for effecting partition and delivery of possession according to the shares to which the plaintiffs may be found entitled.
Subject to what is contained in the foregoing paragraph, the appeal will stand dismissed with costs.
Appeal dismissed.
| On principles of equity, justice and good conscience, which apply to the Punjab (where the , is not in force) if one of several joint mortgagors redeems the entire Mortgage by paying a s less than the full amount due under the mortgage, he is entitled to receive from his co mortgagors, only their proportionate shares on the amount actually paid by him.
He is not entitled to claim their proportionate shares on the amount which was due to the mortgagee under the terms of the mortgage on the date of redemption.
Hodgson vs Shaw ; , Digambar Das vs Harendra Narayan Panday [(1910) and Suryanarayana vs Sriramulu [(1913) referred to.
Judgment of the High Court of Punjab at Simla affirmed.
|
Appeal No. 18 of 1952.
Appeal from the Judgment and Order dated December 12, 1949, of the High Court of Judicature at Bombay (Weston and Shah JJ.) in First Appeal No. 456 of 1949, arising out of Judg ment and Decree dated January 24, 1949, of the 186 Bombay City Civil Court in Civil Suit No. 106 of 1948.
M.C. Setalvad, Attorney General for India, (S.B.Jatharwith him) for the appellant.
N. P. Engineer (E. H. Bhaba with him) for the respondent.
November 5.
The Judgment of the Court was delivered by DAS J.
This is an appeal filed with the special leave of this Court.
It is directed against the judgment and decree passed December 2, 1949, by a Division Bench (Weston and Shah JJ.) of the Bombay High Court reversing, the ground of absence of jurisdiction, the judgment and decree for possession passed January 24, 1949, by the Bombay City Civil Court and directing the return of the plaint for presentation to the proper Court.
There is no dispute as to the facts material for the purposes of this appeal.
or about April 15, 1908, the Board of Trustees for the Improvement of the City of Bombay put up to auction plots Nos. 16, 17 and 18 of new survey Nos. 8234, 8235 and 8244 situate the Princess Street Estate of the Board containing an area of 2235 square yards for being let certain conditions.
One Sitaram Luxman was the highest bidder and was declared the tenant at an annual rent per square yard to be calculated at the rate of 41/2 per cent of Rs. 29 per square yard and he signed the memorandum of agreement incorporating the conditions upon which the auction was held and by which he agreed to be bound.
He deposited the moneys in terms of clause 3 of the conditions, and upon such payment entered into possession of the plots.
By clause 7 Sitaram Luxman agreed, within the time specified therein, to build and complete at a cost of not less than Rs. 50,000 a building consisting of 5 floors with suitable offices, drains etc.
according to plans and specifications to be made by an approved architect and approvedby the Board By clause 17 187 he agreed, so soon as the main building should be roofed in, to insure in the joint names of the Board and of himself and, until the granting of the lease thereinafter provided, keep insured the buildings and works the plots for the full value thereof.
Clause 18 of the conditions was as follows: "18.
The lease.
Immediately after the completion within the time limited by condition 7 of the said buildings and works to the satisfaction of the Trust Engineer testified by his certificate the Trustees will if the contract has not previously been determined grant to the tenant or his approved nominee who shall accept the same a lease of the said plot with buildings thereon for the term of 999 years from the date of the auction at the yearly rent calculated in accordance with the accepted bidding for the plot.
" Clause 25 gave power to the Board, if the buildings were not completely finished within the stipulated time and certain other contingencies, to forfeit the deposit and to enter upon and retain possession of the plots and all buildings and works then standing thereon.
Pursuant to this agreement the said Sitaram Luxman erected those plots a building which has since come to be known as the New Sitaram Building.
the completion of the building, by an Indenture of lease made April 19, 1916, between, the Trustees for the Improvement of the City of Bombay and one Rustomji Dhunjibhoy Sethna the receiver of the estate of Sitaram Luxman appointed by the High Court in Suit No. 720 of 1913, the Trustees, pursuant to the said agreement and in consideration of the monies which had been expended in the erection of the buildings and of the rent and the covenants thereinafter reserved and contained, demised unto the lessee all that piece of land situate their Princess Street estate together with the buildings erected thereon to hold the same for 999 years from April 15, 1908, paying therefor up to January, 15, 1909, the rent of Re. I and during the remainder of 188 the term the yearly rent of Rs. 2,916 by equal quarterly payments.
By the said Indenture the lessee covenanted to pay all rates and taxes, not to use or to permit to be used, without the lessor 's consent, the portion of land not built upon except as open space, not to pull down, add to or alter the buildings without such consent, to keep in repair all drains sewers etc., to repair, pave, cleanse and paint and amend all the buildings, walls etc., to permit the lessors and their employees to enter upon the premises to inspect the conditions thereof 48 hours ' notice, to use the demised premises for residential purposes or as offices and schools only and not as a public house or liquor shop or for any business or trade, throughout the term to keep the buildings insured against fire in the joint names of the lessor and the lessee and to rebuild or reinstate and repair the building if destroyed or damaged by fire or otherwise.
There was a proviso for re entry for nonpayment of rent for 30 days or for breach of any of the lessee 's covenants.
In 1925 all the properties of the Trustees for the Improvement of the City of Bombay vested in the Bombay Municipality under and by virtue of Bombay Act XVI of 1925.
By a deed of assignment made April 26, 1948, Shri Bhatia Co operative Housing Society Limited, a society registered under the Bombay Co operative Societies Act, VII of 1921, the appellant before us, acquired the lessee 's interest in the demised premises.
June 29, 1948, the appellant served a notice the respondent before us who was a monthly tenant in occupation of Block No. B/2 the ground floor of the New Sitaram Building at a monthly rental of Rs. 52 5 9 to quit and vacate the same July 31, 1948.
By his advocate 's reply the respondent maintained that he had been paying the rent regularly and otherwise performing the terms of his tenancy and claimed the protection of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Act LVII of 1947); 189 The respondent not having vacated the block under his occupation the expiry of the notice to quit, the appellant filed summary Suit No. 106 of 1948 against the respondent in the City Civil Court at Bombay for vacant possession of the said Block No. B/2 the ground floor of the said New Sitaram Buildings and mesne profits from August 1, 1948, until delivery of possession.
After stating the material facts, the appellant submitted that the Bombay Act LVII of 1947 did not apply to the demised premises.
The respondent filed his written statement maintaining that under section 28 of the Bombay Act the CityCivil Court had no jurisdiction to entertain the suit.
He averred that he had performed and observed all the conditions of his tenancy and was ready and willing to do so, that the New Sitaram Building had been constructed at the expense of the appellant 's predecessor in title and that the premises belonged to the appellant and not to the Government or a local authority and that the respondent was entitled to the protection of the Bombay Act LVII of 1947.
Leaving out the issue as to whether the appellant was entitled to any compensation, there were 4 issues raising in effect two points, namely, (1) whether the Court had jurisdiction and (2) whether the Bombay Act LVII of 1947 applied to the premises in suit.
The learned City Civil Court Judge in a well considered and careful judgment answered the issues in favour of the appellant and decreed the suit.
The respondent appealed to the High Court.
The High Court reversed the decision of the trial Judge and holding that the Bombay Act LVII of 1947 did apply to the premises and consequently that the City Civil Court, by virtue of section 28 of that Act, had no jurisdiction to entertain the suit, directed that the plaint, be returned to the appellant for being filed in the proper Court.
The High Court having declined to grant leave to the appellant to appeal to this Court, the appellant applied for and obtained special leave 190 of this Court to prefer this appeal and filed this appeal pursuant to such leave.
Learned counsel for the respondent took a preli minary objection, founded the provisions of section 28 of the Bombay Act, that the City Civil Court had no jurisdiction to entertain the suit, for that section clearly states that in Greater Bombay the Court of Small Causes alone shall have jurisdiction to entertain and try any suit between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of that Part of the Act applied and to decide any application made under the Act and to deal with any claim or question arising out of the Act and no other Court should have jurisdiction to entertain any suit or proceeding or to deal with such claim or question.
If, as contended for by the appellant, the Act does not apply to the premises, then section 28 which is an integral part of the Act and takes away the jurisdiction of all Courts other than the Small Causes Court in Greater Bombay cannot obviously be invoked by the respondent.
The crucial point, therefore, in order to determine the question of the jurisdiction of the City Civil Court to entertain the suit, is to ascertain whether, in view of section 4 of the Act, the Act applies to the premises at all.
If it does, the City Civil Court has no jurisdiction but if it does not, then it has such jurisdiction.
The question at once arises as to who is to decide this point in controversy.
It is well settled that a Civil Court has inherent power to decide the question of its own jurisdiction, although, as a result of its enquiry, it may turn out that it has no jurisdiction over the suit.
Accordingly we think, in agreement with the High Court, that this preliminary objection is not well founded in principle or authority and should be rejected.
The main controversy between the parties is as to whether the Act applies to the demised premises.
The solution of that controversy depends upon a true construction of section 4 (1) of the Bombay Act LVII of 1947, Which runs as follows: 191 "4.
(1) This Act shall not apply to any promises belonging to the Government or a local authority or apply as against the Government to any tenancy or other like relationship created by a grant from the$ Government in respect of premises,taken lease or requisitioned by the Government; but it shall apply in respect of premises let to the Government or a local authority.
" It is clear that the above sub section has three parts, namely (1) This Act shall not apply to premises belonging to the Government or a local authority, (2) This Act shall not apply as against the Government to any tenancy or other like relationship created by grant from the Government in respect of premises taken lease or requisitioned by the Government, (3) This Act shall apply in respect of premises lot out to the Government or a local authority.
The contention of the appellant Society is that the demised premises belonged to the Trustees for the improvement of the City of Bombay and now belong to the Bombay Municipality both of which bodies are local authorities and, therefore, the Act does not apply to the demised premises.
Learned counsel for the respondent, however, urges that the object of the Act, as recited in the preamble, is inter alia, to control rent.
It follows, therefore, that the object of the legislation was that the provisions of the Act would be applicable only as between the landlord and tenant.
Section 4 (1) provides for an exemption from or exception to that general object.
The purpose of the; first two parts of section 4 (1) is to exempt two cases of relationship of landlord and tenant from the operation of the Act, namely, (1) where the Government or a local authority lets out premises belonging to it, and (2) where the Government lets out premises taken on lease or requisitioned by it.
It will be observed that the second part of section 4 (1) quite clearly exempts "any tenancy or other like relationship" created by the Government but the first part makes no 192 reference to Any tenancy or other like relationship at all but exempts the premises belonging to the Government or a local authority.
If the intention of the first #part were as formulated in item (1), then the first part of section 4 (1), like the second part, would have run thus: This Act shall not apply to any tenancy or other like relationship created by Government or local authority in respect of premises belonging to it.
The Legislature was familiar with this form of expression, for it adopted it in the second part and yet it did not use that form in the first.
The conclusion is, therefore, irresistible that the Legislature did not by the first part intend to exempt the relationship of landlord and tenant but intended to confer the premises belonging to Government an immunity from the operation of the Act.
Learned counsel for the respondent next contends that the immunity given by the first part should be held to be available only to the Government or a local authority to which the premises belong.
If that were the intention then the Legislature would have used phraseology similar to what it did in the second part, namely, it would have expressly made the Act inapplicable "as against the Government or a local authority".
This it did not do and the only inference that can be drawn from this circumstance is that this departure was made deliberately with a view to exempt the premises itself.
It is said that if the first part of the section is so construed as to exempt the premises from the operation of the Act, not only as between the Government or a local authority the one hand and its lessee the other, but also as between that lessee and his subtenant, then the whole purpose of the Act will be frustrated, for it is well known that most of the lands in Greater Bombay belong to the Government or one or other local authority, e.g., Bombay Port Trust and Bombay Municipality and the greater number of tenants will not be able to avail themselves of the benefit and protection of the Act.
In the first place, the 193 preamble to the Act clearly shows that the object of the Act was to consolidate the law relating to the control of rents and repairs of certain premises and not of all premises.
The Legislature may well have thought that an immunity given to premises belonging to the Government or a local authority will facilitate the speedy development of its lands by inducing lessees to take up building leases terms advantageous to the Government or a local authority.
Further, as pointed out by Romer L. J. in Clark vs Downes(1), which case was approved by Lord Goddard C.J. in Rudler vs Franks(1) such immunity will increase the value of the right of reversion belonging to the Government or a local authority.
The fact that the Government or a local authority may be trusted to act fairly and reasonably may have induced the Legislature all the more readily to give such immunity to premises belonging to the Government or a local authority but it cannot be overlooked that the primary object of giving this immunity was to protect the interests of the Government or a local authority.
This protection requires that the immunity should be held to attach to the premises itself and the benefit of it should be available not only to the Government or a local authority but also to the lessee deriving title from it.
If the benefit of the immunity was given only to the Government or a local authority and not to its lessee as suggested by learned counsel for the respondent and the Act applied to the premises as against the lessee, then it must follow that under section 15 of the Act it will not be lawful for the lessee to sublet the premises or any part of it.
If such were the consequences, nobody will take a building lease from the Government or a local authority and the immunity given to the Government or a local authority will, for all practical purposes and in so far at any rate as the building leases are concerned, be wholly illusory and worthless and the underlying purpose for bestowing such immunity will be rendered wholly ineffective.
In our opinion, therefore, the consideration of the (I) (2) 194 protection of the interests of the sub tenants in premises belonging to the Government or a local authority cannot override the plain meaning of the preamble or the first part of section 4 (1) and frustrate the real purpose of protecting and furthering the interests of the Government or a local authority by conf erring its property an immunity from the operation of the Act.
Finally, learned counsel for the respondent urges that the words "belonging to" have not been used in a technical sense and should be read in their popular sense.
It is pointed out that it was the lessee who erected the building at his own cost, he is to hold it for 999 years, he has the right of subletting the building in whole or in part rent and terms to be fixed by him, of ejecting sub tenants, and of assigning the lease.
Therefore, it may fairly be said that the premises or, at any rate, the building belongs to the lessee and the rights reserved by the lease to the lessor are only by way of security for the preservation of the building which, the expiry or sooner determination of the lease, will vest in the lessor.
This line of reasoning has found favour with the High Court which has held that although in form the building belongs to the Bombay Municipality who are the successors in interest of the lessors, in substance the building belongs to the appellant, the assignee of the lessee, and not to the Bombay Municipality.
We are unable to accept this reasoning, for we see no reason to hold, in the circumstances of this case, that the substance does not follow the form.
By the opera tive part of the lease the demise is not only of the land but also of the building standing thereon.
This demise is 'certainly an act of ownership exercised by the lessor over the land as well as the buildings.
Under section 105 of the Transfer of Property Act a lease is a transfer only of a right to enjoy the demised, premises, but there is no transfer of ownership or interest in the demised promises to the lessee such as there is in a sale (section 54) or a mortgage (section 58).
In the present case, the lessee cannot, his 195 own covenant, use the buildings in any way he likes.
He has to use the game only as offices or schools or for residential purposes and cannot, without the lessor 's consent, use them for purposes of any trade or, business.
He cannot pull down the buildings or make any additions or alterations without the lessor 's consent.
He cannot build upon the open space.
He must, if the premises are destroyed by fire or otherwise, reinstate it.
The lessor has the right to enter upon and inspect the premises at any time giving 48 hours ' notice.
All these covenants clearly indicate that the lessor ha$ the dominant voice and the real ownership.
What are called attributes of ownership of the lessee are only the rights of enjoyment which are common to all lessees under well drawn leases, but the ownership, in the land and in the building is in the lessor.
It is true that the lessee erected the building a this own cost but he did so for the lessor and the lessor 's land agreed terms.
The fact that the lessee incurred expenses in putting up the building is precisely the consideration for the lessor granting him a lease for 999 years not only of the building but of the land as well at what may, for all we know, be a cheap rent which the lessor may not have otherwise agreed to do.
By the agreement the building became the property of the lessor and the lessor demised the land and the building which, in the circumstances, in law and in fact belonged to the lessor.
The law of fixtures under section 108 of the Transfer of Property Act may be different from the English law, but section 108 is subject to any agreement that the parties may choose to make.
Here, by the agreement the building became part of the land and the property of the lessor and the lessee took a lease that footing.
The lessee or a person claiming title through him cannot now be heard to say that the building does not belong to the lessor.
Forfeiture does not, for the first time, give title to the lessor.
forfeiture he re enters upon what has all along been his own property.
Said Lord Macnaghten in Heritable Reversionary Company vs Mullar(1): (I) (1892] A.C. 598 at 021, 196 "The words 'Property ' and 'belonging to ' are not technical words in the law of Scotland.
They are to be understood, I think, in their ordinary signification.
They are infact convertible terms; you can hardly explain the one except by using the other.
A man 's property is that which is his own, that which belongs to him.
What belongs to him is his pro perty.
" In our opinion the interest of the lessor in the demised premises cannot possibly be described as a contingent interest which will become vested the expiry or sooner determination of the lease, for then the lessor could not have demised the premises including the building as he did or before the determination, of the lease exercise any act of ownership or any control over it as he obviously has the right to do under the covenants referred to above.
The truth is that the lessor, after the building was erected, became the owner of it and all the time thereafter the demised premises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease.
If it were to be held that the building belonged to the lessee by reason of his having put it up at his own cost and by reason of the attributes of ownership relied by learned counsel, then as between the local authority (the lessor) and the lessee also the building must for the same reason founded what,have been called the attributes of ownership be held to belong to the lessee and the Act will apply.
Surely that could not possibly be the case, for it would mean that the Government or a local authority will always be bound by the Act in respect of the building put up by the lessee under building leases granted by it in respect of land belonging to it.
In that case the immunity given to the Government or a local authority will be wholly illusory and worthless.
In ' our view in the case before us the demised premises including the building belong to a local authority and are outside the operation of the Act.
This Act being out of the way, the appellants were well within their 197 rights to file the suit in ejectment in the City Civil Court and that Court had jurisdiction to entertain the suit and to pass the decree that it did.
I The result, therefore, is that we allow this appeal, set aside the judgment and decree of the High Court and restore the decree passed by the City Civil Court.
The appellant will be entitled to costs throughout in all Courts.
Appeal allowed.
| Section 4 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, which provides that the Act shall not apply to premises belonging to the Government or a local authority applies not only to suits between the Government or a local authority as a landlord against the lessee, but also to suits by a lessee of the Government or a local authority against his sublessee.
The indemnity conferred is in respect of premises belonging to the Government or a local authority.
A building site was auctioned to a person by the City Im provement Trust of Bombay with a condition that the bidder Was to put up a building of a certain description at a cost of not less than Rs. 50,000 and after the Completion of the building, the site and the building were to be leased to the bidder for a period of 999 years at a fixed yearly rent.
Held, a construction of the lease deed that the building put up by the bidder belonged to the Trust and not to the bidder and a suit by the lessee against his sub lessee was not governed by the Bombay Rents, Hotels and.
Lodging House Rates Control Act, 1947, as the premises belonged to a local authority within the meaning of section 4 (1) of the Act, and the suit could accordingly be instituted in the City Civil Court of Bombay.
A civil Court has inherent jurisdiction to decide the question of its own jurisdiction and to entertain a suit although as a result of the inquiry it may turn out that it has no jurisdiction.
|
Appeal No. 105 of 1950.
Appeal from the Judgment and Order dated March 22, 1945, of the Court of the Judicial Commissioner, Ajmer Merwara, Ajmer (Davies J. C.) in Civil First Appeal No. 16 of 1944, arising out of the Judgment and Decree dated March 13, 1944, of the Court of the Judge, Small Causes, Ajmer, and Additional District Judge, Ajmer, in Civil Suit No. 28 of 1942.
section section Deedwania for the appellant.
M. C. Setalvad, Attorney General for India, (J. N, Sharma, with him) for the respondents, 199 1952.
November 10.
The Judgment of the Court was delivered by MAHAJAN 'J.
This is an appeal by special leave granted by the Privy Council and limited to the question of court fee, viz., whether the memorandum of appeal presented to the High Court court fee was payable under section 7 (iv) (e) or article 17 of Schedule II of the Court Fees Act.
The question whether the memorandum of appeal was properly stamped arose in the following circumstances: Edward Mills Co. Ltd. is a joint stock company situate in Beawar, Ajmer Merwara.
In accordance with the provisions of the articles of the company one Seth Gadh Mal Lodha and Rai Sahib Moti Lal (respondent No. 2) were its chairman and managing director respectively since 1916.
Seth Gadh Mal Lodha represented his family 'firm of Kanwal Nain Hamir Singh, while Rai Sahib Moti Lal represented the joint family firm of Champa Lal Ram Swaroop, 1st July, 1938, Rai Sahib Moti Lal and his firm were adjudged insolvents by the Bombay High Court.
The result was that respondent No. 2 had to vacate the office of managing director and the members of his firm also became ineligibleforit.
By a resolution of the board of direetors passed 18th July, 1938, Gadh Mal Lodha was appointed to take the place of Rai Sahib Moti Lal as managing director.
Gadh Mal Lodha died llth January, 1942, and the board of directors then appointed Seth Sobhagmal Lodha to act as chairman as well as managing director till the, appointment was made by the company.
An extraordinary meeting of the company was called for the 8th February, 1945, for the election of the chairman.
At this meeting conflict &rose between the two groups represented by Sobhagmal Lodha and Moti Lal.
The chairman therefore dissolved the meeting but the supporters of Moti Lal continued to hold it and passed a resolution appointing him as the sole agent and chairman for a period of twenty years a remuneration equal to ten per cent of the profits of the company It is this 200 resolution of the 8th February, 1942, which has led to the present dispute.
Seth Sobhagmal in the situation that arose approached the District Judge of Ajmer with the prayer that a general meeting of the company may be held under the supervision of the court.
This request was allowed 11th February, 1942, and the court ordered that the meeting be held 12th February, 1942, under the chairmanship of Seth Sobhagmal.
Respondent No. 2 being aggrieved by this order, filed an ap plication in revision in the Court of the 'judicial Commissioner impugning the order.
The learned Judicial Commissioner allowed the revision and directed that the resolution of the 8th February, 1942, should be acted upon.
Having failed to get redress in the summary proceedings, the appellant then filed the suit out of which this appeal arises for quashing the resolution of the 8th February, 1942.
In the plaint he asked for the following relies: 1.
That it be declared that the appointment of defendant No. 2 is illegal, invalid and ultra vires and that he has no right to act as chairman, managing director etc.
of defendant No. 1; 2.
That a receiver be appointed to take charge of the management of the company, until a properly qualified chairman managing director etc.
are duly appointed as required by the memorandum and articles of the company.
The plaint bore a court fee stamp of Rs. 10 only, but the objection of the respondents that court fee was payable relief No. 2 the appellants paid ad valorem fee Rs. 51,000 which was the valuation of the suit for purposes of jurisdiction.
The Additional District Judge dismissed the suit the preliminary ground that it was not maintainable as it related to the internal management of the company and that the, appellants had no right to bring it without impleading the directors who were necessary parties to it.
201 Aggrieved by this decision of the trials Judge, the appellants preferred an appeal to the Court of the Judicial Commissioner, Ajmer Merwara, at Ajmer.
The memorandum of appeal was Stamped with a courtfee stamp of Rs. 1 0 and it was expressly stated therein that relief No. 2 of the plaint was given up.
An objection was raised regarding the amount of courtfee paid the memorandum of appeal.
The Judicial Commissioner ordered that proper court fees be paid thereon in a month.
In this order no reasons were given for this decision.
The additional fee demanded was not paid, and the Judicial Commissioner dismissed the appeal with costs 22nd March, 1945.
An application was made for leave to appeal to the Privy Council against this order but, it was refused.
In the order refusing leave it was said as follows: " appeal to this court, the memorandum was again stamped with a ten rupee stamp only and the respondents therefore objected.
It having been conceded by plaintiffs earlier that the relief for the receivership was consequential to the relief for the declaration, the appellants were directed to pay the same stamp as had been paid in the trial Court.
They objected stating that they had expunged from their memorandum of appeal the request that the court should appoint a receiver and that they were not, therefore, liable to pay the same amount this a notice was issued and counsel were beard.
It being clearly set out in section 42 of the Specific Relief Act that no court shall grarant a declaration only where the plaintiff being able to seek further relief than a mere declaration of title omits to do so, the appellants were directed to pay as earlier ordered the same amount as bad ultimately been paid the plaint.
They had earlier sought a consequential relief and the court 'was, therefore, entirelv unable to hold that the plaintiffs were unable to seek a further relief, they having sought the relief in the lower court and it having been refused to them.
The amount of the stamp was not paid and the appeal was therefore dis missed with costs.
" 202 The reasons for demanding additional court fee, though not mentioned in the original order, are stated in this order.
The question for determination in this appeal is whether the order of the Judicial Commissioner demanding additional court fee can be sustained in law.
A memorandum of appeal, as provided in article 1 of Schedule I of the Court Fees Act, has to be stamped according to the value of the subject matter in dispute in appeal; in other words, the relief claimed in the memorandum of appeal determines the value of the appeal for purposes of court fee.
The only relief claimed in the memorandum of appeal was the first one mentioned in the plaint.
This relief being purely of a declaratory character, the memorandum of appeal was properly stamped under article 17 of Schedule II It is always open to the appellant in appeal to give up a portion of his claim and to restrict it.
It is further open to him; unless the relief is of such a nature that it cannot be split up, to relinquish a part of the claim and to bring it within the amount of court fee already paid: Brahnmnandam vs Secretary of State for India(1); Ram Prasad vs Bhiman(2); Karam Chand vs Jullundur Bank Ltd(1); Neelachalam vs Nara singha Das(4); Sah Bamehand vs Pannalal(5); Chuni Lal vs Sheo Charanlat Lalman(1).
The plaintiffs in express terms relinquished the second relief,they had claimed in the plaint, in their memorandum of appeal.
For the purpose of deciding whether the memorandum of appeal was properly stamped according to the subjectmatter of the appeal, it was not open to the Judicial Commissioner to canvass the question whether the suit with the second prayer eliminated from it fell within the mischief of the proviso to section 42 of the Specific Relief Act.
That was a question which related to the merits of the appeal and did not concern its proper institution this ground, therefore, the Judicial Commissioner had no jurisdiction to demand (I) Mad. 48 (2) All. 151.
(3) A.I.R. 1927 Leh. 543.
(4) A.R. (5) A.I.R. 1929 All.
(6) All.
203 additional fee from the plaintiffs and the appeal could not be dismissed for failure to meet it.
We are thus of the opinion that the order demanding additional court fee the memorandum of appeal as it stood, ' that is, minus the second prayer, was erroneous and we hold that the memorandum of appeal was properly stamped, as the subject matter of the appeal was purely of a declaratory character.
Mr. Setalvad for the respondents contended that the first relief claimed in the plaint, and which was the subject matter of the appeal included within it consequential relief and was not purely declaratory in nature and therefore the Judicial Commissioner was right in demanding additional court fee the value of the consequential relief.
It was said that the words that respondent No. 2 "had no right to act as chairman and managing director" amounted to a claim for consequential relief.
We are unable to agree.
The claim contained in the first relief of the plaint is to the effect that it be declared that defendant No. 2 has no right to act as chairman an managing director because of his appointment being illegal, invalid, and ultra vires.
The declaration claimed is in negative form that defendant No. 2 has no right to act as chairman and managing director.
No claim for a consequential relief can be read within this prayer.
The words "that defendant 2 has no right to act as chairman. . ' ' are mere repetition and reiteration of what is contained in the opening sentence of the paragraph.
This contention of Mr. Setalvad, therefore, cannot be sustained.
It was next contended that in view of the provisions of section 12 of the Court Fees Act it should be held that the decision of the Judicial Commissioner ' was final, and could not be challenged in appeal.
Section 12 of the Court Fees Act enacts as follows: "Every question relating to Situation for the purpose of determining the amount of any fee chargeable under this chapter a plaint or memorandumu 204 of appeal shall be decided by the court in which such plaint or memorandum, as the case may be, is filed, and such decision shall be final as between the parties 'to the suit.
" The provisions of this section have to be read and construed keeping in view the provisions of the Code of Civil Procedure.
Order VII, Rule 11, Civil Procedure Code, provides as follows: "The plaint shall be rejected (b) where the relief claimed is undervalued and the plaintiff, being required by the court to correct the valuation within a time to be fixed by the court, fails to do so;. (d) where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and the plaintiff, being required by the court to supply the requisite stamp paper within a time to be fixed by the court, fails to do so.
" An order rejecting a plaint is a decree as defined in section 2; sub section (ii), and is appealable as such.
There is an apparent conflict between the provisions of the Code of Civil Procedure and the provisions of section 12 which make the order relating to valuation final and efforts to reconcile the provisions of the Court Fees Act and the Code have resulted in some divergence of judicial opinion the construction of the section.
In a number of decisions the Calcutta High Court took the view that the finality declared by section 12 of the Court Fees Act had been taken away by the relevant provisions of the Code, as the order rejecting a plaint was appealable as a decree, no matter whether the dispute related to the category under which the same falls for purposes of court fee or only to valuation pure and simple under a particular category: Vide In re Omrao Mirza vs Mary Jones(,) and Tara Prasanna Chongdar vs Nrisingha Moorari Pal(1).
This extreme view has not been maintained in later decisions and it has been held that the finality declared by section 12 is limited only to the question (2) Cal.
205 of valuation pure and simple and does not relate to the category under which a certain suit falls: Tariman Khatun vs Secretary o State for India in Council(1).
The Allahabad High Court in its earlier decisions took the extreme view: Vide Muhammad Sadik vs Muhammad Jan(2).
Later that court veered round to the view that the finality declared by section 12 only related to matters of, appraisement.
The High Court of Lahore has placed a similar construction the meaning of the expression "valuation" in section 12 and has held that the finality attaches only to a decision which concerns valuation simpliciter and no finality attaches when a court decides a question whether a case falls within one or other category of the cases mentioned in the different sections and schedule of the Court Fees Act: Vide Mahna Singh vs Bahadur Singh(1); Mst.
Parmeshri vs PannaLal(1).
Thisviewhasconsistentlybeenheldin thatcourt.
The Madras High Court took the same view in Lakshmi Amma vs Janamajayam Nambiar(5); Annamalai Chetty V. Cloete(6); and Narasimhalu Chetty vs Bamayya Naidu(7).
Mr. Setalvad drew our attention to the recent Full Bench decision of that court in Madana Mohana Naiko vs Krupasindhu Naiko(1).
That case, however, concerned the second part of section 12 and was not concerned directly with the construction to be placed the first part of the section.
It, however, contains certain observations indicating that in the opinion of the judges there was no ground for this restricted construction of the word " valuation " in section 12 and that the finality declared bysection 12 attached not only to valuation pure and simple but also attached to decisions relating to category under which a suit or appeal falls for purposes of court fee.
These obiter observations, however, cannot be said to ,,overrule the earlier Full Beach decision of that court in Lakshmi Amma vs Janamajayam Nambiar(5).
In a (1) I.I.R.(1940) (2) (1889) I.L.R. II All. 91, F.B. (3) (4) A I.R. 27 (5) , F.B. (6) Mad. 204.
(7) A.I.R. 1942 Mad.
(8) A.I.R. 1937 Mad. 81. 206 later decision in Narasimhalu Chetty vs Bamayya Naidu(1), the decision of the Full Bench was explained as not in any way overruling the decision in Lakshmi Amma vs Janamajayam Nambiar(2).
All recent decisions of the Bombay High Court have taken the same view: Vide Dada vs Nagesh(3); Krishnaji Bari Dhandhere vs Gopal Narain Dhandhere(4).
Mr. Setalvad drew our attention to an earlier decision of the Bombay High Court in Vithal Krishna vs Balakrishna Janardan(5).
In that case the court undoubtedly held that no appeal lay and the finality declared by section 12 was comprehensive enough to include all questions whether relating to category or valuation pure and simple.
It was, however, held that the High Court could correct an erroneous decision in the exercise of its revisional powers.
Thus the finality declared by section 12 was destroyed by the exercise of powers of appeal under the guise of exercising revisional jurisdiction.
In Patna and Oudh the game view has been taken as in Lahore.
Vide Chandramoni Koer vs Basdeo Narain Singh (6); Gumani vs Banwari(7).
It thus appears that the consensus of judicial opinion is against the construction suggested by Mr. Setalvad.
We think that the construction given to the language in section 12 in these decisions is right, and our reasons for saying so are these: The difference in the phraseology employed in sections 5 and 12 of the Court Fees Act indicates that the scope of section 12 is narrower than that of section 5.
Section 5 which declares decisions questions of court fee whenever they arise in the chartered High Courts as final makes a decision as to the necessity of paying a fee or the amount thereof final.
Whereas section 12 makes a decision every question relating to valuation for the purpose of determining the amount of any fee payable under chapter 3 a plaint or memorandum of appeal final.
Had section 12 been drafted somewhat as follows (i) A.I.R. 1942 Mad. 502.(5) (1886) I.L.R. lo Bom.
610, F.B, (2) F.B.(6) (3) Bom.
486.(7) (4) A.I.R. 1936 Bom.
207 "If any dispute arises as to the amount of any fee chargeable under this chapter a plaint or memorandum of appeal, it shall be decided by the court in which such plaint or memorandum is filed and such decision shall be final as between the parties$), then the construction contended for by Mr. Setalvad might have been upheld.
When the two sections in the same Act relating to the same subject matter have been drafted in different language, it is not unreasonable to infer that they were enacted with a different intention and that in one case the intention was to give finality to all decisions of the taxing officer or the taxing judge, as the case may be, while in the other case it was only intended to give finality to questions of fact that are decided by a court but not to questions of law.
Whether a case falls under one particular section of the Act or another is a pure question of law and does not directly determine the valuation of the suit for 'purposes of court fee.
The question of determination of valuation or appraisement only arises after it is settled in what class or category it falls.
It has been argued in some decisions that it is absolutely necessary to decide the category in which a case falls before assessing its value and therefore the determination of the question of category is necessarily involved in the determination of the valuation of the suit for purposes of courtfee.
This argument, though plausible, does not seem sound.
The actual assessment of the value depends either arithmetical calculations or upon a valuation by an expert and the evidence led in the case, while the decision of the question of category is one of law and may well be said to be an independent question antecedent but not relating to valuation.
The expression " valuation" interpreted in its ordinary meaning Of "appraisement", cannot be said to necessarily include within its ambit the question of category which is a matter of law.
The construction placed this section by a long course of decisions is one which 208 reconciles the provisions of the Court Fees Act with that of the Code of Civil Procedure and does not make those provisions nugatory and is therefore more acceptable than the other constructions which would make the provisions of either one or the other of these statutes nugatory.
Perhaps it may be possible to reconcile the provisions of the two statutes by holding that the finality declared by section 12 of the Court Fees Act means that the parties cannot impugn such a decision by preferring an appeal but that it does not confer such decisions a complete immunity from examination in a higher court.
In other words section 12 when it says that such a decision shall be final between the parties only makes the decision of the court a question of court fee nonap pealable and places it the same footing as other interlocutory nod appealable orders under the Code and it does no more than that.
If a decision under section 12 is reached by assuming jurisdiction which the court does not possess or without observing the formalities which are prescribed for reaching such a) decision, the order obviously would be revisable by the High Court in the exercise of revisional powers.
Similarly, when a party thinking that a decision under section 12 is palpably wrong takes the risk of his plaint being rejected or suit dismissed and then appeals from the order rejecting the plaint or from the decree dismissing the suit but not from the decision the question of court fee, then it is open to him to challenge the interlocutory order even the question of court fee made in the suit or apppal.
The word "finality" construed in the limited sense in which it is often used in statutes means that no appeal lies from an order of this character as such and it means no more than that.
Conceding for the sake of argument but not admitting that Mr. Setalvad is right in his contention that section 12 is comprehensive enough to include within its ambit all questions relating to court fee whether they involve a decision as to question of category or as to valuation simpliciter, in the present 209 case the Judicial Commissioner decided none of these questions and: his decision cannot be said to be one falling within the ambit of section 12.
All that the Judicial Commissioner decided was that as the suit could not be maintained without asking for relief No. 2, the same fee was payable the memorandum of appeal as the plaint.
In substance the court decided an issue regarding the maintainability of the appeal without first deciding whether the appeal had been properly instituted in that court.
No finality can attach to such a decision by the provisions of section 12, as in reality it decides no question within, the ambit of section 12 of the Court Fees Act.
For the reasons given above the second objection raised by Mr. Setalvad that no appeal lies from the order of the Judicial Commissioner by special leave is without force and is overruled.
The result, is, that the appeal is allowed, the decision of the Judicial 'Commissioner dismissing the appeal is set aside and the case remanded to him for decision in accordance with law the basis that the memorandum of appeal presented to him was properly stamped.
The appellants ' costs of this appeal will be costs in the appeal in the Court of the Judicial Commissioner.
Appeal allowed.
| In a plaint the following reliefs were asked for, viz., (i) that it be declared that the appointment of 'defendant No. 2 as chairman of the board of directors of a company is illegal, invalid and ultra vires and that he has no, right to act as chairman, managing director etc., and (ii) that a receiver be appointed to take charge of the management of the company.
The 'plaint bore a court fee stamp of Rs. 10 only but, the objection of the defendants, ad valorem fee was paid Rs. 51,000 which was the valuation of the suit.
The suit was dismissed and the plaintiff preferred an appeal giving up the second relief and paying a court fee of Rs. 10 only.
The appellate Court ordered payment of ad valorem court fee and non compliance rejected the memorandum of appeal, 0n further appeal: ' 198 Held, (i) that it was o pen to the appellant to give up the second relief in appeal and, as the subject matter of the appeal was of & purely declaratory nature, the memorandum of appeal was properly stamped; (ii)that the first relief was of a purely declaratory nature and did not involve any consequential relief ; (iii)that section 12 of the Court Fees Act did not preclude the Court from considering the correctness of the order of the low er appellate court rejecting the appeal the ground that the memorandum of appeal was not properly stamped.
The finality imposed by section 12 of the Court Fees Act deci sions relating to court fee attaches only to decisions concerning valuation simpliciter; it does not attach to decisions relating to the category under which a suit or appeal falls for purposed of court fees.
Section 12 of the Court Fees Act when it says that such a decision shall be final between the parties only makes the decision of the court a question of court fee non appealable and places it the same footing as other interlocutory non appealable orders under the Code and does no more than that.
If a decision under section 12 is reached by assuming jurisdiction which the court does not possess or without observing the formalities which are prescribed for reaching such a decision, the order obviously would be revisable by the High Court in the exercise of revisional powers.
Similarly, when a party thinking that a decision under section 12 is palpably wrong takes the risk of his plaint being rejected or suit dismissed and then appeals from the order rejecting the plaint or from the decree dismissing the suit but not from the decision the question of court fee, then it is open to him to challenge the interlocutory order even the question of court fee in the suit or appeal.
The word " finality " construed in the limited sense in which it is often used in statutes means that no appeal lies from an order of this character as such and it means no more than that.
|
Appeals Nos. 110 and 111 of 1951.
Appeals from the Judgment and Decree dated May 6, 1946, of the High Court of Judicature at Calcutta (Biswas and Chakravartti JJ.) in Original Decree No. 43 of 1942 with Civil Rule 399 of 1945, arising out of Judgment and Decree dated June 30, 1941,, of the Second Court of Additional Subordinate Judge, 24 Parganas, in Title Suit No. 63 of 1938.
N. C. Chatterjee (Saroj Kumar Chatterjee and A. N. Sinha, with him) for the appellants in Civil Appeal No. 110.
Panchanan Ghose (section N. Mukherjee and Benoyendra Prasad Bagehi, with him) for Respondents Nos.
I (a) and 1 (b) in Civil Appeal No. 110 and the appellants in Civil Appeal No. I I I. Ram Krishna Pal (guardian ad litem) for responded No. 5 (3) in Civil Appeal No. 110 and No.4 (3) in Civil Appeal No. 111, 156 1952.
October27.
The Judgment of the court wag delivered by MAHAJAN J.
These two connected apeals from the judgment and decree of the High Court of Judicature at Calcutta in appeal from Original Decree No. 43 of 1942 dated the 6th May, 1946, arise out of Title Suit No. 63 of 1938, instituted the 21st September, 1938, in the Court of the Second Additional Subordinate Judge of Alipore, by Rajlakshmi against the Sens and the Dasses for possession of the properties which represent a four anna share of the estate once held by one Raj Ballav Seal.
the 8th June, 1870, two days before his death, Raj Ballav Seal, a Hindu inhabitant of the town of Calcutta governed by the Bengal School of Hindu law, executed a will giving authority to his widow Mati Dassi to adopt a son and appointed her and three other persons as executors and trustees of the estate and gave them elaborate directions for the administration and distribution of his extensive properties.
Raj Ballav was one of those persons who believe 0in leaving detailed instructions about their property and the manner in which it is to be managed and taken after their death and expect their wishes to be dutifully carried out by those who survive them.
How his wishes have been respected by his descendants is now a matter of history.
Since the year 1890 this is the eighth or ninth litigation concerning the construction of the testament he made that fateful &ay, and if by any means Raj Ballav could be informed of the result of these litigations and was told that it had been held that he had died intestate, he would surely rise out of the ashes and lodge an emphatic protest against what has happened.
Raj Ballav died the 10th June, 1870, leaving him surviving his widow Mati Dassi and three grandsons, who were sons of a predeceased daughter by another wife and one of whom died in 1880 unmarried.
The grandsons ' line will be referred to in this judgment as the Sens.
On Raj Ballav 's death, Mati Dassi entered 157 into possession of the estate and adopted one Jogendra Nath Seal in 1873 under ' the authority conferred her.
Jogendra married Katyayani, and Rajlakshmi, the plaintiff in the suit out of which these appeals arise, is their only child.
She was less than one year old when Jogendra died in 1886.
Shortly after the death of Jogendra, Mati Dassi adopted Amulya Charan, a brother of Katyayani in further exercise of the authority conferred her.
Mati Dassi died in 1899 and the Sens then appeared to have taken possesion of the estate.
During the lifetime of Mati Dassi, the two grandsons commenced a suit 22nd July, 1890, against Mati Dassi and the other executors then living, Amulya and Katyayani, for a declaration of the rights of the parties under the will, administration of the estate, accounts and a declaration ' as regardit their quarter share of the net income.
Trevelyan J. declared that the grandsons were entitled to an onefourth share of the estate absolutely and directed accounts to be taken.
This declaration was granted against Mati Dassi alone, the suit having been dismissed against the other defendants.
The two grandsons having taken possession of the whole estate after the death of Mati Dassi, Amulya brought a suit the 9th October, 1901, against them and Katyayani for construction of the will and a declaration that he was the duly adopted son and heir of Raj Ballav and that as such, he was entitled to a three fourth share of the estate and the Sens were entitled only to the remaining one fourth share.
By a judgment dated 5th January, 1903, the trial court dismissed the suit the view that under the will the first adopted son had acquired an absolute right, Pitle and interest.in the share of the estate left by the will of his adoptive father and he having left a widow and a daughter, Mati Dassi had no authority to make a second adoption.
This decision was affirmed appeal.
[Amitlya Charan Seal vs Kalidas Sen(1)].
13th January, 1903, eight days after the decision of the trial, court dismissing Amulya 's suit, (I) Cal.
361 158 Katyayani commenced suit No. 11 of 1903 against the Sens, Amulya and the receiver appointed in Amulya 's suit, for construction of the will, declaration of title, partition and accounts.
In, the plaint as originally filed, Katyayani admitted the title of the Sens to an one fourth share of the estate and claimed only a three fourth share for herself as the widow of Jogendra.
The Sens claimed the whole estate for themselves as the heirs of Raj Ballav.
They pleaded that the will was not genuine and that even if it was genuine, the bequests in favour of the adopted son and for the worship of the deity were invalid and that even if they were valid, Jogendra having died before attaining the age of 20 years had taken nothing under the will.
During the pendency of this suit, the 25th September, 1903, the Sens mortgaged the whole sixteen annas of the estate to one Shib Krishna Das in order to secure a loan of Rs. 7,000.
The mortgagee and his representatives in interest will be described in this judgment as the Dasses.
Amulya 's appeal against the judgment of the trial court dated 5th January, 1903, was decided in 1905, during the pendency of Katyayani 's suit No. 1 1 of 1903 instituted the 13th January, 1903, and after the Dasses as mortgagees had entered into possession.
the 26th September, 1905, after the decision of the High Court in Amulya 's suit, Katyayani applied for an amendment of the plaint so as to include a claim for the whole estate in accordance with that decision.
This application was allowed.
To this amended plaint no further written statement was filed by the Sens.
By a judgment dated 21st December, 1905, the trial Judge decreed the claim of Katyayani for,the whole of Raj Ballav 's estate and a decree for recovery of possession of the whole estate was passed in her favour.
It was held that the whole of the corpus of the estate had vested in Jogendra and the provisions of the will whereby a fourth share had been bequeathed to the grandsons were void and ineffectual.
The plea of adverse possession and limitation taken by the Sens was abandoned at the trial, 159 Against this decision an appeal was taken to the District Judge.
The mortgagee Shib Krishna Das was also added as a party in the appeal.
The appeal was compromised and under the compromise Katyayani was to get a six anna share in absolute right in the estate, Kanai, her father, was to get another six anna share for his supposed troubles and expenses in connection with the litigation and each of the Sons a two anna share, their shares to be subject to the mortgage.
charge.
The compromise decree was passed 9th January, 1907, and the suit was remanded to the trial court in order that a partition might be effected and a final decree passed.
A partition was made in due course and final decree was passed 10th September, 1907.
On the 18th April, 1907, after the consent decree had been made by the appellate court in Katyayani 's suit, Rajlakshmi, daughter of Katyayani and the next reversioner to the estate of Jogendra, commenced suit No. 59 of 1907 'against the parties to the compromise for a declaration that the compromise and the consent decree were void and inoperative and that they were not binding her.
The trial court held that the compromise was binding Rajalakshmi but that she was entitled to a declaration that Katyayani had taken only a widow 's estate 'in the six annas share given to her.
appeal by Rajlakshmi, the High Court 8th August, 1910, reversed the trial court 's decree and declared that the consent decree was void and inoperative as against Rajlakshmi and that she was in no way bound by the partition proceedings which had taken place in execution thereof.
The appeal was not contested by the Sons but was contested by the representatives of their mortgagees (the Dasses) who asserted the title of their mortgagors to an one fourth share of the estate both under the compromise decree and the will.
(Bajlakshmi Dassee vs Katyayani Dassee(1).
In the year 1919, two cross suits were commenced by the grandsons and by Katyayani and Rajlakshmi (I) Cal.
160 for recovery of the twelve annas share and the four annas share respectively in the possession of the respective parties.
Katyayani brought suit No. 115 of 1919 for recovery of the four anna share against the Sens and the Dasses, while the Sens brought suit No. 112 of 1919 for recovery of the twelve annas share of the estate against Katyayani and Rajlakshmi.
Both these suits were dismissed by the trial judge and his decision was affirmed appeal 21st July, 1925.
Before the commencement of this suit, the Dasses had brought a suit the foot of their mortgage and had obtained a mortgage decree which was made final 23rd November, 1918.
The property described as 2, Deb Lane, Calcutta, forming part of Raj Ballav 's estate and which had ' been allotted under the compromise to the share of the Sens was notified by a declaration under the Land Acquisition Act for acquisition the 16th January, 1921.
the 27th April, 1928, Ajit Nath Das, mortgagee, made an application ' claiming the entire amount of compensation money and contended that the mortgagee decree holders were entitled to the whole of it.
Rajlakshmi claimed the entire amount as owner of the sixteen anna share of Raj Ballav 's estate.
the 7th July, 1928, a joint award was made in favour of 'all the claimants.
Rajalakshmi asked for a reference to the court the point of apportionment of compensation by a petition made by her the 18th July, 1928.
She asserted that the Sens and the Dasses were not entitled to any portion of the compensation money.
Ajit Nath Das, mortgagee, also made an application for reference the 18th August, 1928.
A similar petition was made by Jogender Mohan Das.
Bholanath Sen filed a statement of the claim 8th June, 1929.
A special judge was appointed under the Land Acquisition Act to try the matter.
He disallowed Rajlakshmi 's claim and held that the Sens were entitled to the entire compensation money.
Both the Sens and the Dasses were represented by their respective counsel and made common cause against Rajlaksbmi.
161 Rajlakshmi appealed to the High Court against the decision of the special judge but without any success.
Her appeal was dismissed 8th March, 1935.
She preferred an appeal to the Privy Council.
This was allowed and Rajlakshmi was declared entitled to the entire compensation money.
(Rajlakshmi vs Bholanath Sen) (1).
Within two months of the decision of the Privy Council, the suit out of which these appeals &rise was commenced, as already stated, by Rajlakshmi 21st September, 1938, against the Sens and the Dsses for possession of the properties which represented the four anna share of the estate allotted to the Sens, and possession of which was delivered to them in pursuance of the terms of the final decree in suit No. 11 of 1903.
A portion of these had since then been purchased by the Dasses in execution of the mortgage decree.
This suit was dismissed by the trial judge.
Rajlakshmi appealed to the High Court against the dismissal of her suit.
The High Court allowed the appeal in part, the judgment and, decree of the trial court in so far as they dismissed the plaintiff 's suit as against the Sens were set aside and the suit was decreed against them and the plaintiff 's title to the properties in suit was declared as against them.
It was ordered that she should recover possession from them, as also from defendant 14 as receiver but that her title and possession were subject to the rights of the defendants respondents 3 to 13 (Dasses) to proceed against the properties in execution of their mortgage decree the basis that these properties were in the possession of and dealt with by defendantsrespondents 1 and 2 as representing the four anna share of the estate to which they had title.
An enquiry was also ordered as to the amount of the mesne profits.
The appeal was dismissed as against respondents 3 to 13, the Dasses.
The correctness of this decision has been impugned before us in these appeals by the respective parties to the extent that it goes against them.
(I) (1938) 65 I.A. 365. 162 In order to appreciate the contentions raised in the two appeals it is necessary to determine the true scope and effect of the decision of the Privy Council in the land acquisition case of 1928 (Rajlakshmi vs Bholanath Sen) (1).
The premises acquired in those proceedings admittedly formed Part of the estate of Raj Ballav Seal, which under the compromise decree of 1907 had by partition fallen to the four anna share allotted to the Sens.
There was a triangular contest about the award of the compensation and a joint award was made in their favour after notice to all the parties interested in the property acquired including the mortgagees.
That the mortgagees were within the definition of the phrase " person interested" is plain from the language of section 10 of the Act and perhaps it would have been unnecessary to mention this elementary fact by reference to the provisions of the Act had not the High Court thought otherwise.
As already stated, the Sens, the Dasses and Rajlakshmi required the question of apportionment of compensation to be referred to the determination of the court and they stated the grounds which their claims were based.
The dispute that arose between the parties is apparent the face of those proceedings and in the words of Lord Thankerton who delivered the decision of the Board, the matter in controversy was whether Rajlakshmi was entitled to the compensation money awarded in respect of the acquisition of part of the premises, 2 Deb Lane, in the town of Calcutta as successor to the estate of Raj Ballav Seal of which the said premises formed part.
The claim to compensation made by the respective parties was founded the assertion of their respective titles in that part of Raj Ballav 's estate which under the partition decree of 1607 had been allotted to the Sens subject to the charge of the Dasses, and the decision the question of apportionment depended the determination of that title.
The land acquisition court had thus jurisdiction to decide the question of title of the parties in the property (I) (1938) 65 I.A. 365.
163 acquired and that title could not be decided except by deciding the controversy between the parties about the ownership of the four anna share claimed by the Sens and Rajlakshmi.
The Land Acquisition Court and the High Court appeal held the title of the four annas share proved in the Sens.
But their Lordships of the Privy Council held otherwise and found that the Sens had no such title, and that Rajlakshmi alone was entitled to the whole of the estate of Raj Ballav Seat including the four anna share that was in possession of the Sens and which their mortgagees had a charge.
This is how their Lordships settled the matter in controversy: "It is important to get a clear view of the position of the estate after the decision of the High Court of 8th August, 1910, the effect of which (inter alia) was to annul the consent decree of the District Court in No. 11 of 1903, and to leave the decree of the Subordinate Judge, dated December 21, 1905, which has been already quoted, as final and binding.
This decree declaring Katyayani 's title to the whole estate, was clearly a decree in Katyayani 's favour as representing the whole interests in the estate, and it has rightly been so regarded by both the courts below in the present case; and it formed res judicata in any I question with the Sens.
As regards possession of the estate, while the decree made an order for recovery of possession, the possession given under the partition of 1907 continued, the Sens being in possession of the four annas.
It seems clear that possession under an agreement which was not binding the reversionary heirs could not avail the Sens in a question with a reversionary heir, whose right to possess could not arise until the succession opened to such heir.
" The above is a clear determination of the question of title between the Sens and Rajlakshmi in regard to the four anna share.
It was argued behalf of the Sens before the Privy Council that in any case 164 the decision in suit No. 115 of 1919instituted by Katyayani against the Sens and their mortgagees for recovery of the four anna share operated as res judicata the claim of Rajlakshmi.
This plea was Inegatived and it was held that the decree in suit No. 115 of 1919 could not and did not affect Rajlakshmi 's right to possession.
There can thus be no doubt that the determination of the question of title to this part of Raj Ballav 's estate was within the scope of the land acquisition proceedings and the title was finally determined in those proceedings.
In order successfully to establish a plea of res judicaia or estoppel by record it is necessary to show that in a previous case a court, having jurisdiction to try the question, came to a decision necessarily and substantially involving the determination of the matter in issue in the later case.
It was at one time a matter of doubt whether the determination of a court to which a matter had been referred by the collector was such a decision and that doubt was resolved by the judgment of the Privy Council in Bamachandra Bao vs Ramachandra Rao(1), which decided that where a dispute as to the title to receive the compensation had been referred to the court, a decree thereon not Appealed from renders the question of title resjudicata in a suit between the parties to the dispute.
In that case it was observed as follows: "The High Court appear only to have regarded the matter as concluded to the extent of the co 'mpensation money, but that is not the true view of what occurred, for, as pointed in Badar Bee vs Habib Merican Noordin(2) it is not competent for the court, in the case of the same question arising between the same parties, to review a previous decision no longer open to appeal, given by another court having jurisdiction to try the second case.
If the decision was wrong, it ought to have been appealed from in due time.
Nor in such circumstances can the interested parties be heard to say that the value of the subject matter (1) (1922) 49 I.A. 129.
(2) 165 which the former decision was pronounced was comparatively so trifling that it was not worth their while to appeal from it.
If such a plea were admissible, there would be no finality in litigation.
The importance of a judicial decision is not to be measured by the pecuniary value of the particular item in dispute.
It has been suggested that the decision was not in a former suit, but whether this were so or not makes no difference, for it has been recently pointed out by this Board in Hook vs Administrator General of Bengal(1) that the principle which prevents the same matter being twice litigated is of general application, and is not limited by the specific words of the Code in this respect." In Bhagwati vs Bam Kali(1) an issue was decided in favour of B in a land acquisition proceeding that she was entitled to the whole of the compensation money.
In a subsequent suit by another widow, who was also a claimant in the land acquisit ion proceedings, for a declaration that she was entitled to a half share in the estate inherited by her husband and his brothers, it was held that her suit was barred by the rule of res judicata, the District Judge having in the previous proceeding decided that she had no title to the land.
In that case part of the property in dispute was, acquired under the Land Acquisition Act and the Collector by his award apportioned the compensation between the widows in equal shares.
Both the widows raised the question of title to the compensation.
The objections were referred under the Act to the District Judge and the District Judge the issue as to whether Bhagwati was entitled to the entire compensation or whether Ram Kali was entitled to a half, found in favour of Bhagwati.
Ram Kali then brought a suit ' against Bhagwati for a declaration of her right to a half share of the whole of the property inherited by the brothers and their mother.
The Subordinate Judge held that the suit was barred by res judicala by the decision of the District Judge in the reference under the Land Acquisition Act.
The High Court (1) (1921) 48 I.A. 187.
(2) (1939) 66 I.A. 145.
166 reversed this decision holding that Ram Kali 's title ,was not the subject matter of the reforence to the ;District Judge and he was not therefore competent to try it.
The Privy Council reversed this decision and held that the District Judge did determine the question of the ownership and his decision was binding upon the parties and the matter was res judicata.
These two decisions, in our opinion, are conclusive the point of resjudicata raised in the present case and in these circumstances it has to be hold that the question of title to the four anna share was necessarily and substantially involved in the land acquisition proceedings and was finally decided by a court having jurisdiction to try it and that decision(thus operates as res judicata and estops the Sens @ and the mortgagees from re agitating that matter in this suit.
We are not now concerned with the question whether the Privy Council was right or wrong.
The High Court held that there can be no question that this decision is binding the Sens and concludes them the question of their title as against Rajlakshmi and that there could be no question also that it is binding the mortagees who were parties to the proceeding.
In the concluding part of the judgment they observed as follows "Our conclusion, therefore, is that there is nothing in the decision of the Privy Council which can operate as res judicata against the Dasses, either directly or constructively, the question of the title of the Sens to the mortgaged properties.
They are bound by the decision so far as it goes: just as the Sens can no longer say that the decision in suit No. 11 ,is not res judicata against them in a question with the plaintiff, both as regards title and the right to possession,so cannot the Dasses say that the decision is not res judicata against the Sens.
But their own right to prove the title of the Sens against the plaint iff is in no way affected.
This may look anomalous, 'but such anomaly is inherent in the doctrine of res judicata which does not create or destroy title but is only a rule of estoppel," 167 With great respect it seems to us that the, conclusion reached as regards the mortgagees is neither illuminating nor sound.
The anomalous result arrived at is account of a wrong approach to the solution of the problem and is not the result of any anomaly inherent in the doctrine of res judicata.
The learned Judges posed certain questions and then attempted to answer them in view of the limited provisions of section 11, Civil Procedure Code, which in terms apply only to suits, forgetting for the moment, if we may say so with respect, that the doctrine of res judicata is based general principles of jurisprudence.
The questions were: (1) Did the judgment of the Privy Council in the 1928 land acquisition proceedings decide any question as to the right of the mortgagees to hold from the Sens a mortgage of the four anna share, or their right to prove the title of their mortgagors in a question between themselves and the reversioners to Jogendra 's estate ? (2) Could the mortgagees have raised these questions in the land acquisi tion proceedings and even if they could have, are the questions such that they ought to have been raised? It is difficult to appreciate how both these questions were germane to the issue to be decided in the case.
Here it is worthwhile repeating what was said by Sir Lawrence Jenkins in delivering the judgment of the Board in Sheoparsan Singh vs Ramnandan Singh(1):" `` In view of the arguments addressed to them, their Lordships desire to emphasize that the rule of res judicata while founded ancient precedent, is dictated by a wisdom which is for all time. 'It hath been well said ' declared Lord Coke, 'interest reipublicaeut sit finis litium otherwise, great oppression might be done under colour and pretence of law ' ; Though the rule of the Code May be traced to an English source, it embodies a doctrine in no way opposed to the spirit of the law as expounded by the Hindu commentators.
Vijnaneswara and Nilakantha include the plea of a former judgment among those allowed by law, each citing for this purpose the text of (i) (1916) 43 I.A. 91 at p. 98 168 Katyayana who describes the plea thus: If a person, though defeated at law, sue again, he should be answered, "you were defeated formerly".
This is called the ple a of former judgment.
And so the application of the rule by the courts in India should , ',be influenced by no technical considerations of form, but by matter of substance within the limits allowed by law.
" The binding force of a judgment delivered under the Land Acquisition Act depends general principles of law and not upon section 11 of the Act.
If it were not binding, there would be no end to litigation, The mortgagees had been fighting about the title of the mortgagors from the year 1910.
When Rajakshmi lost her suit instituted 18th April, 1917, to contest the compromise decree in suit No. 59 of 1907 and preferred an appeal to the High Court, that appeal was not contested by the Sens at all, but was contested by the representatives of their mortgagee who asserted the title of the mortgagors to one fourth share of the estate both under the compromise decree and under the will.
In the year 1919 when the two cross suits above mentioned wore commenced, the mortgagees were impleaded as parties and took an active interest in the cases.
When the proceedings under the Land Acquisition Act were commenced in the year 1928 a joint award was made in their favour along with the Sens and Rajlaksmi.
As parties interested in the property acquired they asked for a reference and gotit.
They were represented by counsel before the land acquisition court and got a decision the question of title as to the four anna share of the estate of the late Raj Ballav in favourofthemortgagorsandthemselves.
They were impleaded as parties in the appeal preferred by Rajlakshmi to the High Court and before that court also they were represented by counsel and were successful in defending that appeal.
They were again impleaded as parties by Rajlakshmi in the appeal preferred by her to the Privy Council.
They took active part in the proceedings for leave to appeal and in 169 having the papers prepared for the use of the Privy Council.
As a matter of fact, they paid part of the printing cost.
Their non appearance before the Privy Council at the time of hearing cannot thus relieve them of the consequence of an adverse decision given against them by, the Privy Council.
They had every, right in those proceedings to defend the title of their, mortgagors to the four anna share and they fully exercised their right except that at the last stage, possibly having won in the two courts below, they assumed that the decision in the final court would also be favourable to them and did not appear before the Privy Council.
It had been held in a number of cases prior to the amendment made in section 73 of the Transfer of Property Act by Act XX of 1929 that where the property acquired forms part of an estate which is mortgaged for an amount larger than the amount awarded as compensation, the mortgagee is entitled to the whole of the compensation in liqcuidation of the mortgage debt.
This view was accepted by the legislature when it added sub sections (2) and (3) to section 73.
Sub section (2) is in these terms "Where the mortgaged property or any part thereof or any interest therein is acquired under the Land ' Acquisition Act, 1894, or any other enactment for the time being in force providing for the compulsory acquisition of immoveable property, the mortgagee shall be entitled to claim payment of the mortgagemoney, in whole or in part, out of the amount due to the mortgagor as compensation.
" In view of the provisions of sections 9, 10, 18 and 30 of the Land Acquisition Act, it is evident that if the mortgagee actually intervenes in the land acquisition proceedings and makes a claim for the compensation, and any question of title arises about the right of the mortgagor in respect to the land acquired which affects the claim for compensation, he has every right to protect that title.
In the proceedings commenced in 1928 for the acquisition of 2, Deb Lane, Calcutta, as already stated, the mortgagees actually 170 intervened and defended the title of their martgagors but without success.
In those circumstances the view taken by the High Court that they had no locus standi to make the claim, as it was not based their own title cannot be sustained because a mortgagee has no other title than the title of his mortgagor.
The judgment of the High Court when it says that the Dasses claimed it the footing that they being; creditors of the Sens, with a lien the property, were entitled to receive the money towards the satisfaction of their debt and their claim therefore was not a claim of title, but only a claim to receive the compensation money, is clearly erroneous as the claim could be established only by proving the title of their mortgagors as against Rajlakshmi.
We have further not been able to follow the judgment of the High Court when it says that the and acquisition court must be presumed to have dismissed the mortgagees ' claim the proper and legal ground that the mortgagees being mere mortgagees had no locus standi to lay claim for the compensation money.
It would have been more accurate if it was said that the land acquisition court having held the title of the Sens proved to the premises acquired, presumed that the compensation money to which the Sons were entitled would be paid in due course to their mortgagees as both of them were sailing together and had a common cause against Rajlakshmi.
The High Court further observed that the mortgagees were bound by the decision of the Privy Council so far as it goes against them.
We are not able to see to which part of the decision this remark relates.
The only decision that the Privy Council gave was the question of the title of the Sens.
The award of compensation to Rajlakshmi was a mere consequence of it, and if the Sens had no title in the four anna share of Raj Ballav 's estate, the mortgagees obviously can have no lien any part of the property included in that share.
The strangest part of the judgment of the High Court is when it says that the right of the Dasses to prove the title of the Sens against the plaintiff was in no way affected by the Privy Council decision.
171 ,It seems to have lost sight of the fact that that right was advanced by the Dasses more than once.
It was exercised by them in the litigation of the year 1907 which ended in the decision of the High Court in 1910.
It was exercised by them in the 1919 litigation and was again exercised by them in the land acquisition proceedings of 1928.
In these circumstances it appears to us that they had no further right left to establish the title of their mortgagors in the four anna share of Raj Ballav 's estate claimed by them.
It may be pointed out that the mortgagees having got a decision in their favour from the High Court, absented themselves before us.
One of the representatives of the original mortgagees, Ram Krishen Das, is a minor and was represented by a guardian ad litem appointed for the suit in the court below.
He appeared and contested the appeal and urged that the mortgagees had no interest whatever in the property acquired and that they were interested only in realising their debt.
This contention is directly opposed to the provisions of section 58 of the Transfer of Property Act and the clear provisions of section 73 which only states the law that prevailed even before then.
The result is that we are of the opinion that the High Court was in error in holding that the decision of the Privy Council in the land acquisition case of 1928.
was not binding the mortgagees the question of the title of the Sens to the four anna share of Raj Ballav 'section estate as against Rajlakshmi.
Mr. Panchanan Ghose for the.
Sens made a valiant effort to escape from the effect of the Privy Council judgment in Rajalakshmi vs Bholanath Sen(1) a number of grounds.
None of his arguments, however, was convincing and might well have been summarily ,rejected but we think that it is due to Mr. Ghose and ,his long standing at the Bar that the arguments are noticed and met.
The first contention raised by :him was that the judgment of the Privy Council could not operate as (i) [1938] 65 I.A. 365.
172 res judicata against the present contention of the Sens and the mortgagees,about the title to the four anna share of Raj Ballav 's estate, because the subject matter of those proceedings was the compensation money, a sum of Rs. 900, and not the property that is the subject matter of the present suit.
He argued that when the plea of res judicata is founded general principles of law, that plea can only prevail provided the subject matter in the two cases is identical.
It was conceded that such contention could not be sustained under the provisions of section 11 of the Code.
In our opinion this argument is untenable and was negatived by their Lordships of the Privy Council in Bhagwati vs Bam Kali(1), cited above, in clear and emphatic terms.
In that case, in a regular suit which concerned the rest of the property the plea of res judicata was upheld by reason of the decision in the land acquisition case which concerned another part of the property which had been acquired and for which compensation was payable.
The quotation already cited earlier from this decision brings out that point clearly.
The test of res judicata is the identity of title in the two litigations and not the identity of the actual property involved in the two cases.
It was then argued by Mr. Ghose that the judge who decided the apportionment issue in the land acquisition proceedings of 1928 was a special judge appointed under the Land Acquisition Act and not being a District Judge, the two decisions of the Privy Council.
, i.e., Bamachandra Bao vs Bamachandra Rao(2) and Bhagwati vs Bam Kali(1), had no application, as the special judge had no jurisdiction to hear the present suit, while the District Judge in those cases would have jurisdiction to hear the regular suits.
It was urged that to substantiate the plea of resjudicata even general principles of law it was necessary that the court that heard and decided the former case should be a court competent to hear the subsequent case.
This contention was based the language of (I) [1939] 66 I. A. 145.
(2) [1922] 49 I.A. 129.
173 section 11.
The condition regarding the competency of the former court to try the subsequent suit is one of the limitations engrafted the general rule of res judicata by section 11 of the Code and has application to suits alone.
When a plea of res judicata is founded general principles of law, all that is necessary to establish is that the court that heard and decided the former case was a court of competent jurisdiction.
It does not seem necessary in such cases to further prove that it has jurisdiction to hear the later suit.
A plea of res judicata general principles can be successfully taken in respect of judgments of courts of exclusive jurisdiction, like revenue courts, land acquisition courts, administration courts, etc.
It is obvious that these courts are not entitled to try a regular suit and they only exercise special jurisdiction conferred them by the statute.
We have not been able to appreciate the distinction sought to be made out by Mr. Ghose that had this matter been decided by a District Judge, then the decision of the Privy Council would have been res judicata but as it was decided by a special judge the effect was different.
The District Judge when exercising powers of a court under the Land Acquisition Act, in that capacity is not entitled to try a regular suit and his jurisdiction under the Land Acquisition Act is quite different from the jurisdiction he exercises the regular civil side.
Next it was urged that the decision given by the Privy Council was ex parte, and it had not the force of res judicata unless the subject matter of the two proceedings was identical.
Reliance for this proposition was placed certain observations contained in the decision of the House of Lords in NeW Brunswick Rly.
Co. vs British,* French Trust Corporation(1).
in that case a view was expressed that in the case of a judgment in default of appearance, a defendant is only estopped from setting up in a subsequent action a defence which was necessarily, and with complete precision, decided by the previous judgment, and it (I) (1939] A.C. I. 23 174 was said that if a Writ is issued for a small claim, the defendant may well think it is better to let judgment ,go by default rather than incur the trouble and expense of contesting it and that in such cases the default judgment one bond cannot be used as governing the construction of 992 other bonds even if identical in tenor as it would involve a great hardship were the defendat precluded from contesting the later case.
These observations have no apposite.
application to the circumstances of the present case where the judgments of the first two courts were given after full contest and then a party defaulted in appearing before the Privy Council after having obtained judgment in his favour in the courts below.
A now point was taken for the first time before us which had not been taken in express terms in the written statement and which had not been argued either before the Subordinate Judge or before the High Court.
The point was that the present suit of Rajlakshmi was barred by section 47, Civil Procedure Code, inasmuch as she obtained a decree for possession of the whole estate including the four anna share now in dispute in her suit No. II of 1903 and having obtained a decree for possession, her remedy to recover possession of that share along with the twelve anna share was by executing that decree and not by a separate suit.
, The plea has no substance in it.
The decree given in suit No. 11 of 1903 became unexecutable by reason of the compromise arrived at in appeal in that case in 1907, which compromise was given full effect by actual partition of the property.
When that, decree was declared null and void at the instance of Rajlakshmi, it still remained binding inter partes during the lifetime of Katyayani and that was the reason why Katyayani 's suit brought in 1919 for recovery of possession of the four anna share was dismissed.
That suit, however, was held to have been instituted by Katyayani for protection of her personal rights and not as a representative of Jogendra 's estate.
It was for this reason that the Privy Council in, the 1928 land acquisition case held that it 175 had not the effect of res judicata Rajlakshmis suit claiming title in the four anna share of Raj Ballav 's estate which under the partition decree had gone to the Sens. Katyayani in view of the compromise decree had no right to execute the decree as a different situation had arisen after the decree had been passed.
She had a fresh cause of action ' to bring a new suit for possession by setting aside the compromise.
This she did but failed.
As against Raj lakshmi the plea of section 47 in these circumstances can have no validity.
Even as against Katyayani it was untenable and it seems it was for this reason that this plea was never taken either in the earlier suit of 1919 or in the present suit.
For the reasons given above this contention of Mr. Ghose also fails.
Mr. Ghose raised a question of limitation and urged that Rajlakshmi 's suit was barred by time inasmuch as the cause of action to sue for possession of the four anna share accrued to Jogendra and he having failed to file a suit, both Katyayani and Rajlakshmi must be taken to have lost the title to the part of the property in the possession of the Sens.
The premises which this contention is based is erroneous.
Jogendra died long before the Sens took possession of the property and therefore Jogendra before his death had no cause of action against the Sens to eject them as they were not in possession.
the other hand, the trustees were holding the property his behalf.
The pleas of limitation and adverse possession were abandoned by the Sens a former occasion, as already stated in the earlier part of this judgment, and they were negatived by the Privy Council in the land acquisition proceedings.
It is evident that the possession of the Sens during the lifetime of Katyayani could not confer any title them as against Rajlakshmi, the next reversioner, whose title to the estate could only arise the death of Katyayani.
For the reasons given above we hold that the appeal (No. 111 of 1951) preferred behalf of the 176 Sens has no merits and must fail.
It is accordingly dismissed with costs.
The appeal preferred by Rajlakshmi against the mortgagees '(No. 110 of 1951) is allowed with costs in all the courts and her title to the property in suit and for possession of the f same is decreed and it is directed that the defendants do deliver Possession of the suit properties to the plaintiff.
It is further declared that the plaintiff is entitled to mesne profits from the defendants.
An enquiry will be made as to the amount of mesne profits due prior and subsequent to the institution of the suit and there will be a decree for the amount so determined.
In conclusion we do express the hope that this judgment will finally conclude the ruinous litigations which have been going in courts since the last 62 years in respect of Raj Ballav 's estate and ingenuity of counsel will no longer be pressed into service to again reopen questions which must now be taken as finally settled.
Appeal No. 110 allowed.
Appeal No. 111 dismissed.
Agent for the appellants in C. A. No. 110 and respondent No. 1 in C.A. No. Ill section C. Bannerjee.
Agent for respondents Nos. 1 (a) and (b) in C.A. No. 110 and appellants in C. A. No. Ill: Sukumar Ghose.
| Where the right to receive compensation for property acquired in land acquisition proceedings as between rival claimants depends the title to the property acquired and the dispute as to title is raised by the parties and is decided by the Land Acquisition Judge after contest, this decision as to title operates as res judicata in a subsequent suit between the same parties the question of title.
The binding force of a judgment delivered under the Land Acquisition Act depends general principles of law and not section 11 of the Civil Procedure Code, and the decision of a Land Acquisition Judge would operate as res judicata even though he was not competent to try the subsequent suit.
If a mortgagee intervenes in land acquisition proceedings and makes a claim for compensation, and any question of title arises about the title of the mortgagor in respect to the land acquired which affects the claim for compensation, he has every right to protect that title and if he defends that title and the issue is decided against his mortgagor, the decision would operate as res judicata even as against the mortgagee.
Certain premises which formed part of the estate of a de ceased person were acquired in land acquisition proceedings.
There was a triangular contest about the right to the compensation money between A and B, two rival claimants to a four annas 155 share in the estate of the deceased, and C, a mortgagee from one of the claimants.
The three parties required the question of apportionment to be referred to the Court and a Special Judge who was appointed decided the question of title to the four annas share upon which the right to receive the compensation depended and made an award.
The Land Acquisition Judge and High Court found the title in favour of B after due contest between the parties but the Privy Council reversed the decision and decided the question of title in favour of A.
In a subsequent suit between the same parties the question of title was again raised:, Held (i) that the decision of the Privy Council the ques tion of title in the land acquisition proceedings operated as res judicata as against B &a well as C, even though the Land Acquisition Judge was a Special Judge who would have had no juris diction to try the subsequent suit; (ii)that the rule of res judicata was applicable even though the subject matter of dispute in the land acquisition proceedings was the compensation money and not the property which was in dispute in the subsequent suit ; (iii)the fact that the mortgagee did not appear at the hearing before the Privy Council was immaterial as the judgments in the first two courts were given after full contest.
Ramachandra Rao vs Ramachandra Rao [1922] 49 I.A. 129, and Bhagwati vs Ram Kali [1939] 66 I.A. 14 applied.
|
Appeal No. 65 of 1952.
Appeal from an award dated 17th November, 1951, made by the Labour Appellate Tribunal of India, Calcutta, in Appeal No.
280 of 1951.
K. P. Khaitan (Harnam Das, with him) for the appellant.
H. B. Asthana for the respondents.
Gopalji Mehrotra for the Intervener.
December 2.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal by special leave against the decision of the Labour Appellate Tribunal, Calcutta, upholding the award made by the State Industrial Tribunal, Uttar Pradesh, with certain modifications.
An industrial dispute arose between the appellant, the Vishwamitra Press Karyalaya, Kanpur, and the respondents, the workers of the Vishwamitra Press as represented by the Kanpur Samachar Patra Karamchari Union, Kanpur, in regard to the alleged victimisation of certain workmen under the guise of 'retrenchment.
That industrial dispute was referred to the Industrial Tribunal, by a notification dated the 24th April, 1951.
The time for making the award expired on the 9th June, 1951, and on the 9th June.
1951, a further notification was issued extending the time for making the award up to the 30th June, 1951.
The 30th June, 1951, was a public holiday and the 1st July was a Sunday.
The Industrial Tribunal made its award on the 2nd July, 1951, and pronounced it in open court on that day.
It was however thought by the Uttar Pradesh Government that the award was beyond time and invalid and on the 18th July, 1951, a notification was issued extending the period up to the 3rd July, 1951.
This award was challenged by the appellant before the Labour Appellate Tribunal.
The Labour Appellate.
Tribunal negatived the Contentions of the appellant.
The appellat applied 274 for special leave which was granted by this Court on the 21st December, 1951, limited to the following grounds: " (1) The Government had no power to extend the time of the making of award after the expiry of the time originally fixed, and the award made by the Adjudicator after such time is illegal, ultra vires, inoperative and void.
(2)In any case the State Government I had extended the time for making the award till 30th June, 1951, and the Adjudicator 's award made after that date is void.
(3)That the extension of time by the Government on.
21st July, 1951, after even the time extended previously had expired, was ultra vires, and it could not make a void award a valid award.
" The industrial dispute which arose between the appellant and the respondents was referred by the Uttar Pradesh Government to the Industrial Tribunal in exercise of the powers conferred by sections 3 and 4 of the Uttar Pradesh .
The Uttar Pradesh Government had in exercise of the powers conferred by section 3 (d) of the Act promulgated an order inter alia providing for the adjudication of the industrial disputes referred by it to the Industrial Tribunals.
Paragraph 16 of that order ran as under : " The Tribunal or the Adjudicator shall hear the dispute and pronounce its decision within 40 days (excluding holidays observed by courts subordinate to the High Court) from the date of reference made to it by the State Government, and shall thereafter as soon as possible supply a copy of the same to the parties to the dispute, and to such other persons or bodies as the State Government may in writing direct.
Provided that the State Government may extend the said period from time to time." Paragraph 9 which prescribed the powers and functions of Tribunals inter alia provided: 275 "(9).
The decision shall be in writing, and shall be pronounced in open court and dated and signed by the member or members of the Tribunal, as the case may be, at the time of pronouncing it.
" It was not disputed before us that the original period calculated in accordance with paragraph 16 above expired on the 9th June, 1951, and the Uttar Pradesh Government validly extended the period up to the 30th June, 1951.
It was however contended that the Industrial Tribunal should have made its award on the 30th June, 1951, and not on the 2nd July, 1951, as it purported to do.
It was urged that the provision as to excluding holidays observed by courts subordinate to the High Court which obtained in paragraph 16 above did not apply when the period was extended up to a particular date.
It would apply only if the period was extended by a particular number of days when for the purpose of the computation of those days the holidays would have to be excluded in the manner therein mentioned.
The Uttar Pradesh Government having extended the period up to the, 30th June, 1951, it was submitted that the award, should have been made by the 30th June, 1951, and, not later and having been made on the 2nd July, 1951, was therefore beyond time and invalid.
This argument might well have prevailed but for the provisions of section 10 of the U. P. General Clauses Act, 1904.
That section provides: " Where, by any United Provinces Act, any act or proceeding is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the court or office is closed; on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court or office is open.
" The Industrial Court was closed on the 30th June, 1951, which was declared a public holiday.
The 1st July, 1951, was a Sunday and it was competent to the 'Industrial Court to pronounce its decision on the next 276 afterwards on which the Industrial Court was n, i.e., the 2nd July, 1951.
Prima facie therefore award which was pronounced on the 2nd July, 1, was well within time.
The only thing which Shri Khaitan counsel for the appellant urged before us therefore was that the Industrial Court was not a court within the meaning of section 10 of the U. P. General Clauses Act, "The court" according to his submission could only be construed mean a court in the hierarchy of the civil courts the State and an Industrial Court did not fall hin that category.
We are unable to accept this intention of Shri Khaitan.
The Uttar Pradesh industrial Disputes Act, 1947, was an Uttar Pradesh t.
The General Order dated the 15th March, 1951, which provided inter alia for the reference of the industrial dispute for adjudication and the manner in which it was to be adjudicated, was promulgated by e U. P. Government in exercise of the powers conferred upon it by section 3 (d) of the Act.
Paragraph (9) of the General Order provided for the decision ing pronounced by the Industrial Tribunal in open urt and we fail to understand how it could ever be ged that the Industrial Tribunal was not a court ithin the meaning of section 10 of the U. P. General lauses Act.
If the Industrial Tribunal was thus a ourt within the meaning of section 10 of the U. P. General Clauses Act the court was closed on the 30th ane, 1951, as also on the 1st July, 1951, and the decion could be pronounced by the Industrial Court on i.e next day afterwards on which it was open, i.e., on ne 2nd July, 1951.
In our opinion therefore the ecision which was pronounced on the 2na July, 951, 'was well within time and was valid and binding ' in the parties.
The above decision is determinative of this appeal, and the appeal will therefore stand dismissed with costs.
Appeal dismissed.
Agent for the respondents and the intervener: C. P. Lal.
| The time prescribed for making an award under the U. P. , expired on the 9th June, 1951.
The Government extended the period up to 30th June, 1951.
The 30th June was a public holiday and 1st July was a Sunday and the Industrial Tribunal pronounced its award on the 2nd July: Held, that an Industrial Tribunal to which a dispute is referred under the U. P. , is a " Court " within the meaning of section 10 of the U.P. General Clauses Act, 1904, and, as the 30th June and 1st July were holidays, the award pronounced on the 2nd July was not invalid on the ground that it was not pronounced within the period fixed. 273
|
l Appeal No. 89 of 1952.
Appeal by 'special leave from the Judgment dated June 27, 1951, of the Labour Appellate Tribunal of India at Calcutta in Appeals Nos.
94 and 142 of 1950 arising out of the Award of the Second Industrial Tribunal, Madras (published in the Fort St. George Gazette, Madras, dated October 3, (1950).
N. C. Chatterjee (section N. Mukherjee, with him) for the appellant.
section C. C. Anthoni Pillai (President, Madras Labour Union) for the respondents.
December 2.
The Judgment of the Court Was delivered by MAHAJAN J.
220 MAHAJAN J.
This is an appeal by special leave from a decision dated 27th June, 1951, of the Labour Appellate Tribunal of India at Calcutta in appeals Nos. 94 and 142 of 1950, arising out of the award of the Second Industrial Tribunal, Madras.
The relevant facts and circumstances giving rise to the appeal are as follows: On 1st November, 1948, 859 night shift operatives of the carding and spinning department of the Carnatic Mills stopped work, some at 4 p.m., some at 4 30 p.m. and some at 5 p.m.
The stoppage ended at 8 p.m. in both the departments.
By 10 p.m, the strike ended completely.
The apparent cause for the strike was that the management of the Mills had expressed its inability to comply with the request of the workers to declare the forenoon of the 1st November, 1948, as a holiday for solar eclipse.
On the 3rd November, 1948, the management put up a notice that the stoppage of work on the 1st November amounted to an illegal strike and a break in service within the meaning of the Factories Act (XXV of 1934) and that the management had decided that the workers who had participated in the said strike would not be entitled to holidays with pay as provided by the Act.
This position was not accepted by the Madras Labour Union.
The Madras Government by an order dated the 11th July, 1949, made under section 10(1) (c) of the (XIV of 1947), referred this dispute along with certain other disputes to the Industrial Tribunal, Madras.
The adjudicator gave the award which was published in the Gazette on 12th October, 1950.
By his award the adjudicator found that there could be little doubt that the stoppage of work by the night shift workers on the night of the last November,, 1948, was a strike, that it was an illegal strike, since the textile industry is notified as a public utility industry and there could be no legal strike without a proper issue of notice in the terms prescribed by the .
No such notice had been given.
In view of this finding he upheld the view of the management that the continuity of service of the workers was broken by the interruption 221 caused by the illegal strike and that as a consequence the workers who participated in such strike were not entitled to annual holidays with pay under section 49 B (1) of the Factories Act.
He, however, considered that the total deprivation of leave with pay ordered by the management was a severe punishment and on the assumption that he had power to scrutinize the exercise of the discretion by the management in awarding punishment, reduced the punishment by 50 per cent and held that the workers would be deprived of only half their holidays with pay.
The decision of the management was varied to this extent.
The Mills as well as the Union appealed against this decision to the Labour Appellate Tribunal.
That Tribunal upheld the contention of the Mills that the adjudicator had no power to interfere with and revise the, discretion of the management exercised by it under section 49 B (1).
It also upheld the contention of the Union that what happened on the night of the 1st November did not amount to a strike and did not cause any interruption in the workers ' service.
This is what the Tribunal said: "It would be absurd to hold that non permitted absence from work even for half an hour or less in the course of a working day would be regarded as interruption of service of a workman for the purpose of the said section.
We are inclined to hold that the stoppage of Work for the period for about 2 to 4 hours in the circumstances of the case is not to be regarded as a strike so as to amount to a break in the continuity of service of the workman concerned.
" In the result the appeal of the Union on this point was allowed and it was ordered that holidays at full rates as provided for in section 49 A of the Factories Act will have to be calculated in respect of the operatives concerned on the footing that there was no break in the continuity of their service by the stoppage of work on 1st November, 1948.
In this appeal it was contended on behalf of the Mills that on a proper construction of section 49 B (1) 29 222 of the Factories Act: (XXV of 1934) the management was right in its decision that the continuity of service was broken by the interruption caused by the illegal strike and that the workers were not entitled to annual holidays with pay under the said section inasmuch as they would not have completed a period of twelve months ' continuous service in the factory, and that the non permitted absence as a result of concerted refusal to work even for 2 to 4 hours in the course of a working day amounts to an illegal strike and consequently an interruption of service of a workman for the purpose of section 49 B.
In our judgment, this contention is well founded.
Section 49 B provides "Every worker who has completed a period of twelve months continuous service in a factory shall be allowed, during the subsequent period of twelve months, holidays for a period of ten, or, if a child, fourteen 'Consecutive days, inclusive of the day or days, if any, on which he is entitled to a holiday under subsection (1) of section 35. " "Explanation.
A worker shall be deemed to have completed a period of twelve months continuous service in a factory notwithstanding any interruption in service during those twelve months brought about by sickness ', accident or authorized leave not exceeding ninety days in the aggregate for all three or by a lookout, or by a strike which is not an illegal strike, or by intermittent periods of involuntary unemployment not exceeding thirty days. . . .
It is clear that the benefit of this section is not avail able in cases where the interruption in service is brought about by an illegal strike.
Section 2 q ) of the Industrial, Disputes Act (Act XIV of 1947) defines "strike" as meaning "a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have 223 been so employed to continue to work or to accept employment.
The adjudicator found on the evidence and circumstances of the case that there was concert and combination of the workers in stopping and :refusing resume work on the night of the 1st November ' He observed that the fact that a very large number of leave applications was put in for various reasons pointed to the concerted action and that the appli cation given by the workers and their representatives also indicated that they were acting in combination both in striking and refusing to go back to work on the ground that they were entitled to leave for the night shift whenever a half a day 's leave was granted to the day shift workers.
He further hold that the refusal of the workers to resume work in spite of the attempts made by the officers and their own Madras Labour Union representatives indicated that they were not as a body prepared to resume work unless their demand was conceded.
In our opinion, the conclusion reached by the adjudicator was clearly right and the conclusion cannot be avoided that the workers 'were acting in concert.
That being so, the action of the workers on the night of the 1st November clearly fell within the definition of the expression "strike" in section 2(q) of the .
We have not been able to appreciate the view expressed by the Appellate Tribunal that stoppage of work for a period of two to four hours and such non permitted absence from work cannot be regarded as strike.
Before the adjudicator the only point raised by the Union was that it was a spontaneous and lightning strike but it was not said by them that stoppage of work did not fall within the definition of " 'strike" as given in the Act.
It cannot be disputed that there was a cessation of work by a body of persons employed in the Mills and that they were acting in combination and their refusal to go back to work was concerted.
All the necessary ingredients,.
therefore, of the definition exist in the present case and the stoppage of work on 1st November, 224 1948, amounted to a strike.
It was not a case of an individual worker 's failure to turn up for work.
It was a concerted action on the part of a large number of workers.
The Appellate Tribunal was thus in error in not regarding it as a strike and it had no discretion not to regard what in law was a strike as not amounting to a strike.
If it cannot be denied that the stoppage of work on 1st November, 1948, amounted to a strike, then it was certainly an illegal strike because no notice had been given to the management, the Mills being a public utility industry.
It was contended by the President of the Union, who argued the case on behalf of the workers, that the Factories Act had no application to this case, because by a notification of the Government of Madras dated 23rd August, 1946, the Buckingham an Carnatic Mills had been exempted from the provisions of Chapter IV A of the Act and the provisions of sections 49 A and 49 'B were not therefore attracted to it and that no substantial question of law in respect to the construction of the section fell to be decided by this Court and that being so, this Court should not entertain this appeal under article 136 of the Constitution.
This contention has no validity.
The Mills were granted exemption from the provisions of Chapter IV A of the Factories Act because their leave rules were in accordance with the provisions of Chapter IV A of the Factories Act.
These rules being in similar terms, the decision of the matter depends on the construction of the rules and this in volves a substantial question of law.
Reliance was next placed on section 49 A of the Factories Act which provides that the provisions of the new Act would not operate to the prejudice of any rights which the workers were entitled to under the ' earlier rules and it was argued that under the leave rules of the Mills which prevailed prior to the coming into force of the Factories Act, the workers were entitled to privilege leave and there was no provision in those rules similar to the one that has been made in section 49 B or in the new rules and that the Mills 225 had no right to deprive them of leave by reason of the strike.
This contention cannot be sustained because section 49 A (2) of the Factories Act has no application to the case of the Carnatic Mills in view of the notification ' dated 23rd August, 1946.
Lastly, it was urged that the stoppage of work on 1st November, 1948, was not a concerted action on the part of the workers and that several workers in their own individual capacity wanted leave on that date.
In our opinion, in view of the facts and circumstances detailed in the adjudicator 's award this contention cannot be seriously considered.
We concur in the view of the facts taken by the adjudicator that the action of the 859 workers on the night of 1st November, 1948, fell within the definition of the word "strike" as given in section 2(q) of the and it was an illegal strike and the workers thus lost the benefit of holidays that they would have otherwise got under the rules.
The learned counsel for the appellant undertook on behalf of the management ex gratia that it would condone the default of the workers on 1st November, 1948, and the cessation of work on that night would not be treated as depriving them of the holidays under the rules and we appreciate the spirit in which this undertaking was given and hope that the workers would also take it in that spirit.
The result is that the appeal is allowed, and the decision of the Labour Appellate Tribunal on this point is set aside.
In the circumstances of this case we make no order as to costs.
Appeal allowed.
| Where the night shift operatives of a department of a textile mills stopped work from about 4 p.m. up to about 8 p.m. on a certain day, the apparent cause of the strike being that the management of the mills had expressed its inability to comply with the request of the workers to declare the forenoon of that day as a holiday for solar eclipse, and it was found that the stoppage of work was the result of concerted action: Held (i) that the stoppage of work fell within the definition of a "strike" in section 2 (q) of the ; (ii) that the strike was an illegal strike as the textile mills was a public utility industry and no notice had been given to the management, even though the refusal to work continued only for a few hours; and (iii) that the continuity of service of the workers was interrupted by this illegal strike and they were not entitled to claim holidays with pay under section 49 B (1) of the Indian Factories Act, 1934.
|
Case No. 275 of 1951.
Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated April 11, 1951, of the High Court of Judicature at Calcutta (Das Gupta and Mookerjee JJ.) in Criminal Revision Case No. 1028 of 1950 arising out of the Order dated November 23, 1950, of the Presidency Magistrate, 8th Court, Calcutta, in P. R. Case No. 2107 of 1950.
N.C. Chakravarti for the appellant.
B.Sen for the respondent.
M.C. Setalvad, Attorney General for India (P. A. Mehta, with him), for the intervener.
December 5.
The Judgment of the Court was delivered by BOSE J.
This is an appeal under article 132 (1) of the Constitution.
Leave to appeal was granted by the High Court at Calcutta.
84 646 The appellant was convicted under section 7 (1) of essential Supplies (Temporary Powers) Act of 1946 for an offence said to have been committed on the 24th of October, 1950 The conviction was on At two counts: (1) for selling cloth above the controlled rate and (2) for not issuing a cash memo.
The sentence was rigorous imprisonment for three months and a fine of Rs. 200 with another three months in default.
The trial was before the 8th Presidency Magistrate at Calcutta who adopted a summary procedure.
There was an application for revision before the High Court but it was dismissed.
An application for leave to appeal to this Court was then filed.
It was granted on a ground which was not taken either in the original court or in the revision before the High Court, namely that the Essential Supplies Act of 1946 under which the appellant was convicted was not in force on the 24th of October, 1950, and so there could be no conviction under it.
The validity of this Act was challenged in Joylal Agarwala vs The State(1) but this Court he Id that the Act was valid up to the 31st of March, 1950, that being the life of the Act at the date relevant to that case.
It is necessary to explain that the Act is a temporary Act and that its life has been extended from time to time after the date of its first expiry for a year at a time.
The latest extension at the date of the previous case was up to the 31st of March, 1950.
We therefore start with the position that the Act was a good Act up till that date.
The Act was further extended up till the 31st of March, 1951, by a resolution dated the 20th of December, 1949.
This is the extension with which we are concerned and which is now challenged, the argument being that there was no legislative body in existence on that date competent to extend the life of the Act for another year.
The Gazette notification setting out the resolution is in the following terms (1) ; 647 `` New Delhi, the 22nd December, 1949.
No. F. 7 WL (1) 47.
The following resolution which wag passed by the Constituent Assembly (Legislative) at its meeting held on the 20th of December, 1949, is hereby published for general information : In pursuance of the proviso to section 4 of the India (Central Government and Legislature) Act, 1946, as adapted by the India (Provisional Constitution) Order, 1947, this Assembly hereby approves the extension of the period mentioned in sections 2 and 3 of the said Act for a further period of twelve months commencing on the first day of April, 1950.
" It has to be seen whether the body which passed that resolution had the power to extend the Act.
It can be accepted, because of the decision in Joylal Agarwala vs The State(1), that the Constituent Assembly had authority on 25th of February, 1948, and again on 23rd of March, 1949, to make two successive extensions of the Essential Supplies Act of a year each.
The only question, therefore, is whether any body continued to have that power on the dates material here.
The extensions jug t referred to were brought about as follows.
The Constituent Assembly derived its authority to pass the above resolution from section 4 A of the India (Central Government and Legislature) Act of 1946.
This was an Act of the British Parliament which originally conferred on the British Houses of Parliament the power of approving by resolution the extension of the period fixed by section 4.
Later, the Indian Independence Act of 1947 was passed by the British Parliament and in exercise of the powers conferred by sections 9 and 19 of that Act the Governor General by an Adaptation Order substituted the words " Dominion Legislature " for the words " Houses of Parliament " and thus enabled the Dominion Legislature to exercise the powers of Parliament in this behalf.
At the same time, the (1) ; 131.
648 Governor General introduced section4 A into the British Act of 1946, the India (Central Government and Legislature) Act, 1946, by way of adaptation and conferred on the Constituent Assembly the, powers of the Dominion Legislature.
Thus the Constituent Assembly became empowered to extend the period fixed in section 4 by the passing of a resolution and that in its turn had the effect of extending the life of the Essential Supplies Act of 1946, because section 1 (3) of that Act says that it shall cease to have effect on the expiration of the period mentioned in section 4 of the India (Central Government and Legislature) Act of 1946.
Now section 4 A provides that the Constituent Assembly shall have the powers of the Dominion Legislature under the British Act " until other provision is made by or in accordance with a law made by the Constituent Assembly under sub section (1) of section 8 of the Indian Independence Act, 1947.
" Turning to sub section (1) of section 8 we find that the British Parliament invested the Constituent Assembly with all the powers of the Dominion Legislature " for the purpose of making provision as to the constitution of the Dominion.
" That power it exercised and drew up the Indian Constitution, but in doing so it decided to bring the constitution into being in two instalments and it did that by enacting article 394 and enacting in it that that article and certain others, including article 379, should come into force " at once " at once being the 26th of November, 1949 while the remaining articles were to come into force on the 26th of January, 1950.
Now article 379 (1) provides that `` Until both Houses of Parliament have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body functioning as the Constituent Assembly of the Dominion of India immediately before the commencement of this Constitution shall be the Provisional 649 Parliament and shall exercise all the powers and perform all the duties conferred by the provisions of this Constitution on Parliament.
" It was argued on behalf the appellant that because of this article the Constituent Assembly disappeared as a law making body on and after the 26th of November, 1949, and that its place was taken by the Provisional Parliament referred to by that article, and as the resolution of the 20th December, 1949, purports to be a resolution of the Constituent Assembly (Legislative) and not of the Provisional Parliament, it is a resolution of a body which no longer had authority to enact laws or pass a resolution of this kind affecting the laws of the land.
The learned Attorney General argues, on the other hand, that the Constituent Assembly continued to function as such and to retain its right to exercise its dual functions of constitution making and law making right up to the last stroke of midnight on the 25th of January, 1950.
The very next second, when a new day ushered in a new era for this country, it ceased to exist as a Constituent Assembly and its place was taken by the Provisional Parliament of India.
We need not decide this point, for even if the Provisional Parliament was intended to function on the 26th of November, 1949, and not from the 26th of January, 1950, it is clear that the Constituent Assembly was to continue in existence till " the commencement of the Constitution" which, by article 394, is the 26th of January, 1950.
Consequently, the power conferred on it as a designated body, by the English statute, as adapted by the Governor General, could be validly exercised on the 20th of December, 1949, and was so exercised when it passed,the resolution of that date.
The Provisional Parliament was not a body authorised to exercise the special power of approving the extension of the period mentioned in section 4 of the English statute as that was not one of "the powers conferred by this Constitution on Parliament," nor can bringing the Provisional Parliament into existence on the 26th of November, 1949 650 ( assuming that to be the case) be regarded as other provision" made by the Constituent Assembly within the meaning of section 4 A of the English Act.
It follows the Constituent Assembly was not deprived of these specially designated powers on the date of the resolution.
The next question is whether the Constituent Assembly had the power to extend the life of this particular piece of legislation beyond the 26th of January, 1950.
The question was posed in this way.
It was conceded that the Essential Supplies Act was validly extended up to the 31st of March, 1950.
The resolution which extended its life for another year beyond this was passed on the 20th of December, 1949, but it was argued that it could not take effect till after the expiry of the previous extension, that is, not until the 1st of April, 1950.
But by that time the Constitution had come into being and so neither the Constituent Assembly nor the Provisional Parliament could have extended the life of the temporary Act after its expiration on the 31st of March, 1950, because of Explanation III to article 372.
It follows that the Constituent Assembly which purported to effect the extension ahead of time could not do, in anticipation, what the Constitution says cannot be done after its commencement.
There is nothing in this contention.
The resolution of the 20th December, 1949, took immediate effect and its effect was to alter the date fixed for the expiration of the period mentioned in section 4 of the English statute from the 31st of March, 1950, to the 31st of March, 1951.
The Essential Supplies Act fixed the date for its own expiration as the date flied for the expiration of the period mentioned in section 4 above.
Accordingly, it was an Act which was alive immediately before the 26th of January, 1950, and which was due, at that time, to expire of its own force, not on the 31st of March, 1950, but on the 31st of March, 1951, and as this was a law in force immediately before the commencement of the Constitution 651 it continued in force, because of article 372(1) and Explanation III, until it was due to expire.
That exhausts the constitutional points.
We bold that there was a body in existence.
at all material times competent to extend the life of the Act up till the 31st of March, 1951, and that it did so extend its life on the 20th of December, 1949.
The Act continued in force until after the Constitution and therefore was a living Act at the date of the offences, namely the 24th of October, 1950.
Counsel then sought to attack the conviction on other grounds but a,,; the leave to appeal was confined to the constitutional points be cannot so far as that is concerned, be permitted to travel further.
Of course, it would have been competent for him to file a separate petition for special leave to appeal on the other points but had be done so it would have followed the usual course and he would have been obliged to obtain special leave in the usual way.
We therefore treated this part of the argument as one asking for special leave to appeal.
We heard him fully and are of opinion that these remaining points are not ones on which special leave to appeal should be granted.
We therefore reject this irregular petition for special leave to appeal on its merits.
The appeal filed under article 132 (1) is also dismissed.
Appeal dismissed.
Agent for the intervener: G. H. Rajadhyaksha.
| The Essential Supplies (Temporary Powers) Act, 1946, a temporary Act which was being extended from time to time after the date of its first expiry, for a year at a time, was extended up to the 31st March, 1951, from the 31st March, 1950, by a resolution passed by the Constituent Assembly (Legislative) at a meeting held on the 20th December, 1949.
The appellant who was convicted for an offence committed under the Act on the 24th October, 1950, contended that the Constituent Assembly had no power to extend the Act in view of, the provisions of article 379 (1) of the Constitution, and that at any rate it had no power to extend the duration of the Act beyond the 26th January, 1950 645 Held, that, even assuming that under article 379 (1) the Provi sional Parliament was intended to function from the 26th November, 1949, and not from the 26th.
January, 1950, as the Constituent Assembly was to continue in existence till the 26th January 1950, the power conferred on it as a designated body by the India (Central Government and Legislature) Act, 1946, of the British Parliament as adapted by the India (Provisional Constitution) Order, 1947, could be validly exercised on the 20th December, 1949, and was so exercised when it passed the resolution on that date.
The Provisional Parliament was not a body authorised to exercise the special power of approving the extension of the period mentioned in section 4 of the India Act of 1946 as that was not one of the powers conferred by the Constitution on the Provisional Parliament, nor can bringing the Provisional Parliament into existence on the 26th November, 1949, assuming that to be the case, be regarded as " other provision " made by the Constituent Assembly within the meaning of section 4 of the India Act of 1946.
Held further, that the resolution extending the life of the Act beyond the 26th of January, 1950, was not invalid, as it came into immediate effect and not on the 1st of April, 1950, when the previous extension expired.
Accordingly the Act with its duration extended by virtue of the resolution was an Act immediately in force before the commencement of the Constitution anti so was saved by article 372 (1) and Explanation III.
|
riminal Ap.
peal No. 82 of 1952.
Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated June 10, 1952, of the High Court of Judicature for the State of Punjab at Simla (Bbandari and Khosla JJ.) in Criminal Writ No. 144 of 1951.
M. C. Setalvad (Attorney General for India) and C. K. Daphtary (Solicitor Genera I for India) (B. Gana pathy, with them) for the appellant.
J. B. Dadachanji (amicus curice) for respondent No. 1. 1952.
November 10.
The Judgment of the Court was delivered by DAS J.
This appeal arises out of a habeas corpus petition Bled by one Ajaib Singh in the High Court of Punjab for the production and release of one Musammat Sardaran alias Mukhtiar Kaur, a girl of about 12 years of age.
256 The material facts leading up to the filing of that petition may be shortly stated as follows.
On the report made by one Major Babu Singh, Officer Commanding No. 2 Field Company, section M. Faridkot, in his letter dated February 17, 1951, that the petitioner Ajaib Singh had three abducted persons in his possession, the recovery police of Ferozepore, on June 22, 1951, raided his house in village Shersingwalla and took the girl Musammat Sardaran into custody and delivered her to the custody of the Officer in charge of the Muslim Transit Camp at Ferozepore from whence she was later transferred to and lodged in the Recovered Muslim Women 's Camp in Jullundur City.
A Sub Inspector of Police named Nibar Dutt Sharma was deputed by the Superintendent of Police, Recovery, Jullundur to make certain enquiries as to the facts of the case.
The Sub Inspector as a result of his enquiry made a report on October 5, 1951 to the effect, inter, that the girl had been abducted by the petitioner during the riots of 1947.
On November 5, 1951, the petitioner filed the habeas corpus petition and obtained an interim order that the girl should not be removed from Jullundur until the disposal of the petition.
The case of the girl was then enquired into by two Deputy Superintendents of Police, one from India and one from Pakistan who, after taking into consideration the report of the Sub Inspector and the statements made before them by the girl, her mother who appeared before them while the enquiry was in progress, and Babu alias Ghulam Rasul the brother of Wazir deceased who was said to be the father of the girl and other materials, came to the conclusion, inter alia, that the girl was a Muslim abducted during the riots of 1947 and was, therefore, an abducted person as defined in section 2(a) (1) of the Abducted Persons (Recovery and Restoration) Act LXV of 1949.
By their report made on November 17, 1951, they recommended that she should be sent to Pakistan for restoration to her next of kin but in view of the interim order of the High Court appended a note to the effect that she 257 should not be sent to Pakistan till the final decision of the High Court.
The matter then came before a Tribunal said to have been constituted under section 6 of the Act.
That Tribunal consisted of two Superintendents of Police, one from India and the other from Pakistan.
The Tribunal on the same day, i.e., November 17, 1951, gave its decision agreeing with the findings and recommendation of the two Deputy Superintendents of Police and directed that the girl should be sent to Pakistan and restored to her next of kin there.
The habeas corpus petition came up for hearing before Bhandari and Khosla JJ.
on November 26, 1951, but in view of the several questions of farreaching importance raised in this and other similar applications, the learned Judges referred the following questions to a Full Bench : 1.
Is Central Act No. LXV of 1949 ultra vires the Constitution because its provisions with regard to the detention in refugee camps of persons living in India violate the rights conferred upon Indian citizens under article 19 of the Constitution ? 2.
Is this Act ultra vires the Constitution because in terms it violates the provisions of article 22 of the Constitution ? 3.
Is the Tribunal constituted under section 6 of the Act a Tribunal subject to the general supervision of the High Court by virtue of article 227 of the Constitution ? At the same time the learned Judges made it clear that the Full Bench would not be obliged to confine itself within the narrow limits of the phraseology of the said questions.
On the next day the learned Judges made an order that the girl be released on bail on furnishing security to the satisfaction of the Registrar in a sum of Rs. 5,000 with one surety.
It is not clear from the record whether the security was actually furnished.
The matter eventually came up before a Full Bench consisting of the same two learned Judges 258 and Harnam Singh J.
In course of arguments before the Full Bench the following further questions were added: 4.Does this Act conflict with the provision of article 14 on the ground that the State has denied to abducted persons equality before the law or the equal protection of the laws within the territory of India? 5.Does this Act conflict with the provisions of article 15 on the ground that the State has discriminated against abducted persons who happen to be citizens of India on the ground of religion alone ? 6.
Does this Act conflict with article 21 on the ground that abducted persons are deprived of their personal liberty in a manner which is contrary to principles of natural justice ? " There was also a contention that the Tribunal which decided this case was not properly constituted in that its members were not appointed or nominated by the Central Government and, therefore, the order passed by the Tribunal was without jurisdiction.
By their judgments delivered on June 10, 1952, Khosla and Harnam Singh JJ.
answered question 1 in the negative but Bhandari J. held that the Act was inconsistent with the provisions of article 19(1) (g) of the Constitution.
The learned Judges were unanimous in the view that the Act was inconsistent with the provisions of article 2.2 and was void to the extent of such inconsistency.
Question 3 was not fully argued but Bhandari and Khosla JJ.
expressed the view that the Tribunal was subject to the general supervision of the High Court.
The Full Bench unanimously answered questions 4, 5 and 6 in the negative.
Bhandari and Khosla JJ.
further held that the Tribunal was not properly constituted for reasons mentioned above, but in view of his finding that section 4(1) of the Act was in conflict with article 22(2) Harnam Singh J. did not consider it necessary to express any opinion on the validity of the constitution of the Tribunal.
259 The Full Bench with their aforesaid findings remitted the case back to the Division Bench which had referred the questions of law to the larger Beach.
The case was accordingly placed before the Division Bench which thereafter ordered that Musammat Sardaran alias Mukhtiar Kaur be set at liberty.
The girl has since been released.
The State of Punjab has now come up on appeal before us.
As the petitioner respondent Ajaib Singh represented to us that he could not afford to brief an advocate to argue his case, we requested Sri J. B. Dadachanji to take up the case as ambicus curiae which be readily agreed to do.
He has put forward the petitioners case with commendable ability and we place on record our appreciation of the valuable assistance rendered by him to the Court.
In his opening address the learned Solicitor General frankly admitted that he could not contend that the Tribunal was properly constituted under section 6 of the Act and conceded that in the premises the order of the ' High Court directing the girl to be released could not be questioned.
He, however, pressed us to pronounce upon the constitutional questions raised in this case and decided by the High Court so that the Union Government would be in a position to decide whether it would, with or without modification, extend the life of the Act which is due to expire at the end of the current month.
We accordingly heard arguments on the constitutional questions on the clear understanding that whatever view we might express oh those questions, so far as this particular case is concerned, the order of the High Court releasing the girl must stand.
After hearing arguments we intimated, in view of the urgency of the matter due to the impending expiry of the Act, that our decision was that the Act did not offend against the provisions of the Constitution and that we would give our reasons later on.
We now proceed to set forth our reasons for the decision already announced.
34 260 In order to appreciate the rival contentions canvassed before us it is necessary to bear in mind the circumstances which led to the promulgation of an Ordinance which was eventually replaced by Act LXV of 1949 which is impugned before us as unconstitutional.
It is now a matter of history that serious riots of virulent intensity broke out in India and Pakistan in the wake of the partition of August, 1947, resulting in a colossal mass exodus of Muslims from India to Pakistan and of Hindus and Sikhs from Pakistan to India.
There were heart rending tales of abduction of women and children on both sides of the border which the governments of the two Dominions could not possibly ignore or overlook.
As it was not possible to deal with and control the situation by the ordinary laws the two governments had to devise ways and means to check the evil.
Accordingly there was a conference of the representatives of the two Dominions at Lahore in December, 1947, and Special Recovery Police Escorts and Social Workers began functioning jointly in both the countries.
Eventually on November 11, 1948, an Inter Dominion Agreement between India and Pakistan was arrived at for the recovery of abducted persons on both sides of the border.
To implement that agreement was promulgated on January 31, 1949, an Ordinance called the Recovery of Abducted Persons Ordinance,. 1949.
This Ordinance was replaced by Act LXV of 1949 which came into force on December 28, 1949.
The Act was to remain in force up to October 31, 1951, but it was eventually extended by a year.
That the Act is a piece of beneficial legislation and has served a useful purpose cannot be denied, for up to February 29, 1952, 7,981 abducted persons were recovered in Pakistan and 16,168 in India this circumstance, however, can have no bearing on the constitutionality of the Act which will have to be judged on purely legal considerations.
The Act is a short one consisting of eleven sections.
It will be observed that the purpose of the Act is to implement the agreement between the two countries 261 as recited in the first preamble.
The second preamble will show that the respective governments of the States of Punjab, Uttar Pradesh, Patiala and East Punjab States Union, Rajasthan and Delhi gave their consent to the Act being passed by the Constituent Assembly a circumstance indicative of the fact that those governments also felt the necessity for this kind of legislation.
By section 1 (2) the Act extends to the several States mentioned above and is to re main in force up to October 31, 1952.
The expression "abducted person" is defined by section 2(1) (a) as meaning " a male child under the age of sixteen years or a female of whatever age who is, or immediately before the 1st day of March, 1947, was a Muslim and who, on or after that day and before the 1st day of January, 1949, has become separated from his or her family, and in the latter case includes a child born to any such female after the said date.
" Section 4 of the Act, which is important, provides that if any police officer, not below the rank of an Assistant Sub Inspector or any other police officer specially authorised by the State government in that behalf, has reason to believe that an abducted person resides or is to be found in any place, he may, after recording the reasons for his belief, without warrant, enter and take into custody any person found therein who, in his opinion, is an abducted person, and deliver or cause such persons to be delivered to the custody of the officer in charge of the nearest camp with the least possible delay.
Section 6 enacts that if any question arises whether a person detained in a camp is or is not an abducted person, or whether such person should be restored to his or her relatives or handed over to any other person or conveyed out of India or allowed to leave the camp, it shall be referred to, and decided by , 'a Tribunal constituted for the purpose by the Central Government.
The section makes the decision of the Tribunal final, subject, however, to the power of the Central Government to review or revise any such decision.
Section 7 provides for the implementation of the decision of the 262 Tribunal by declaring that any officer or authority to whom the custody of any abducted person 'has been delivered shall be entitled to receive and hold the person in custody and either restore such person to his or her relatives or convey such persons out of India.
Section 8 makes the detention of any abducted person in a camp in accordance with the provisions of the Act lawful and saves it from being called in question in any court.
Section 9 gives the usual statutory immunity from any suit or proceeding for anything done under the Act in good faith.
Section ' 10 empowers the Central Government to make rules to carry out the purposes of the Act.
The main contest before us has been on question 2 which was answered unanimously by the Full Bench against the State, namely, whether the Act violates the provisions of article 22.
If the recovery of a person as an abducted person and the delivery of such person to the nearest camp can be said to be arrest and detention within the meaning of article 22(1) and (2) then it is quite clear that the pro visions of sections 4 and 7 and article 22(1) and (2) cannot stand together at the same time, for, to use the language of Bhandari J., " it is impossible to obey the directions contained in sections 4 and 7 of the Act of 1949 without disobeying the directions contained in clauses (1) and (2) of article 22." The Constitution commands that every person arrested and detained in custody shall be produced before the nearest Magistrate within 24 hours excluding the time requisite for the journey from the place of arrest to the Court of the Magistrate but section 4 of the Act requires the police officer who takes the abducted person into custody to deliver such person to the custody of the officer in charge of the nearest camp for the reception and detention of abducted persons.
These provisions are certainly conflicting and inconsistent.
The absence from the Act of the salutary provisions to be found in article 22(1) and (2) as to the right of the arrested person to be informed of the grounds of such arrest and to consult and to be 263 defended by a legal practitioner of his choice is also significant.
The learned Solicitor General has not contended before us, as he did before the High Court, that the overriding provisions of article 22(1) and (2) should be read into the Act, for t e o vious reason that whatever may be the effect of the absence from the Act of provisions similar to those of article 22(1), the provisions of article 22(2) which is wholly inconsistent with section 4 cannot possibly, on account of such inconsistency, be read into the Act.
The sole point for our consideration then is whether the taking into custody of an abducted person by a police officer under section 4 of the Act and the delivery of such person by him into the custody of the officerin charge of the nearest camp can be regarded as arrest and detention within the meaning of article 22(1) and (2).
If they are not, then there can be no complaint that the Act infringes the fundamental right guaranteed by article 22(1) and (2).
Sri Dadachanji contends that the Constitution and particularly Part III the ereof should be construed liber ally so that the fundamental rights conferred by it may be of the widest amplitude.
He refers us to the various definitions of the word "arrest" given in several wellknown law dictionaries and urges, in the light of such definitions, that any physical restraint imposed upon a person must result in the loss of his personal liberty and must accordingly amount to his arrest.
It is wholly immaterial why or with what purpose such arrest is made.
The mere imposition of physical restraint, irrespective of its reason, is arrest and as such, attracts the application of the constitutional safeguards guaranteed by article 22 (1) and (2).
That the result of placing such a wide definition on the the term "arrest" occurring in article 22 (1) will render many enactments unconstitutional is obvious.
To take one example, the arrest of a defendant before judgment under the provisions of Order XXXVIII, rule 1, of the Code of Civil Procedure or the arrest of a judgment debtor in execution of a decree under section 55 of the Code will, on this 264 hypothesis, be unconstitutional inasmuch as the Code provides for the production of the arrested person, not before a Magistrate but before the civil court which made the order.
Sri Dadachanji contends that such consideration should not weigh with the court in construing the Constitution.
We are in agreement with learned counsel to this extent only that if the language of the article is plain and unambiguous and admits of only one meaning then the duty of the court is to adopt that meaning irrespective of the inconvenience that such a construction may produce.
if, however, two constructions are possible, then the court must adopt that which will ensure smooth and harmonious working of the Constitution and eschew the other which will lead to absurdity or give rise to practical inconvenience or make well established provisions of existing law nugatory.
We have, therefore, to examine the article in question with care and ascertain the meaning and import of it primarily from its language.
Broadly speaking, arrests may be classified into two categories, namely, arrests under warrants issued by a court and arrests otherwise than under such warrants.
As to the first category of arrest, sections 76 to 86 collected under sub heading B Warrant of Arrest " in Chapter VI of the Code of Criminal Procedure deal with arrests in execution of warrants issued by a court under that Code.
Section 76 prescribes that such a warrant must be in writing signed by the presiding officer, or in the case of a Bench of Magistrates, by any member of such Bench and bear the Beal of the court.
Form No. II of Schedule V to the Code is a form of warrant for the arrest of an accused person.
The warrant quite clearly has to state that the person to be arrested stands charged with a certain offence.
, Form No. VII of that Schedule is used to bring up a witness.
The warrant itself recites that the court issuing it has good and sufficient reason to believe that the witness will not attend as a witness unless compelled to do so.
The point to be noted is that in either case the 265 warrantex facie sets out the reason for the arrest, namely, that the person to be arrested has committed or is suspected to have committed or is likely to commit some offence.
In short, the warrant contains a clear accusation against the person to be arrested.
Section 80 requires that the Police Officer or other person executing a warrant must notify the substance thereof to the person to be arrested, and, if so required, shall show him the warrant.
It is thus abundantly clear that the person to be arrested is informed of the grounds for his arrest before he is actually arrested.
Then comes section 81 which runs thus: " The Police Officer or other person executing a warrant of arrest shall (subject to the provisions of section 76 as to security) without unnecessary delay bring the person arrested before the Court before which he is required by law to produce such person.
" Apart from the Code of Criminal Procedure, there are other statutes which provide for arrest in execution of a warrant of arrest issued by a court.
To take one example, Order XXXVIII, rule 1, of the Code of Civil Procedure authorises the court to issue a warrant for the arrest of a defendant before judgment in certain circumstances.
Form No. 1 in Appendix F sets out the terms of such a warrant.
It clearly recites that it has been proved to the satisfaction of the court that there is probable cause for belief that the defendant is about to do one or other of the things mentioned in rule 1.
The court may under section 55 read with Order XXI, rule 38, issue,a warrant for the arrest of the judgment debtor in execution of the decree.
Form No. 13 sets out the terms of such a warrant.
The warrant recites the decree and, the failure of the judgment debtor to pay the decretal amount to the decree holder and directs the bailiff of the court to arrest the defaulting judgment debtor, unless he pays up the decretal amount with costs and to bring him before the court with all convenient speed.
The point to be noted is that, as in the case of a warrant of arrest issued by a court under the Code of Criminal Procedure, a warrant of arrest 266 issued by a court under the Code of Civil Procedure quite plainly discloses the reason for the arrest in that it sets out an accusation of default, apprehended or actual, and that the person to be arrested is made acquainted with the reasons for his arrest before lie is actually arrested.
The several sections collected under sub heading B Arrest without warrant " in Chapter V of the Code of Criminal Procedure deal with arrests otherwise than under warrants issued by a court under that Code.
Section 54 sets out nine several circumstances in which a police officer may, without an order from a Magistrate and without a warrant, arrest a person.
Sections 55, 57, 151 and 401 (3) confer similar powers on police officers.
Column 3, Schedule II to the Code of Criminal Procedure also specifies; the cases where the police may arrest a person without warrant.
Section 56 empowers an officer in charge of a police station or any police officer making an investigation under Chapter XIV to require any officer subordinate to him to arrest without a warrant any person who may lawfully be arrested without a warrant.
In such a case, the officer deputing a subordinate officer to make the arrest has to deliver to the latter an order in writing specifying the person to be arrested and the offence or other cause for which the arrest is to be made and the subordinate officer is required, before making the arrest, to notify to the person to be arrested the substance of the order and, if so required by such person, to show him the order.
Section 59 authorises even a private person to arrest any person who in his view commits a non bailable and cognisable offence or any proclaimed offender and requires the person making the arrest to make over the arrested person, without unnecessary delay, to a police officer or to take such person in custody to the nearest police station.
A perusal of the sections referred to above will at once make it plain that the reason in each case of arrest without a warrant is that the person, arrested is accused of having committed or reasonably suspected to have committed or of 267 being about to commit or of being likely to commit some offence or misconduct.
It is also to be noted that there is no provision, except in section 56, for acquainting the person to be arrested without warrant with the grounds for his arrest.
Sections 60 and 61 prescribe the procedure to be followed after a person is arrested without warrant.
They run thus: " 60.
A police officer making an arrest without warrant shall without unnecessary delay and subject to the provisions herein contained as to bail, take or send the person arrested before a Magistrate having jurisdiction in the case, or before the officer in charge of a police station." "61.No police officer shall detain in custody a person arrested without warrant for a longer period than under all the circumstances of the case is reasonable, and such period shall, not, in the absence of a special order of a Magistrate under section 167, exceed twenty four hours, exclusive of the, time necessary for the journey from the place of arrest to the Magistrate 's Court.
" Apart from the Code of Criminal Procedure, there are other statutes which authorise the arrest of a person without a warrant issued by any Court.
Reference may, byway of example, be made to sections 173 and 174 of the Sea Customs Act (VIII of 1878) and section 64 of the Forest Act (XVI of 1927).
In both cases, the reason for the arrest is that the arrested person is reasonably suspected to have been guilty of an offence under the Act and there is provision in both cases for the immediate production of the arrested person before a Magistrate.
Two things are to be noted, namely, that, as in the cases of arrest without warrant under the Code of Criminal Procedure, an arrest without warrant under these Acts also proceeds upon an accusation that the person arrested is reasonably suspected of having committed an offence and there is no provision for communicating to the person arrested the grounds for his arrest.
35 268 Turning now to article 22(1) and (2), we have to ascertain whether its protection extends to both categories of arrests mentioned above, and, if not, then which one of them comes within its protection.
There can be no manner of doubt that arrests without warrants issued by a court call for greater protection than do arrests under such warrants.
The provision that the arrested person should within 24 hours be produced before the nearest Magistrate is particularly desirable in the case of arrest otherwise than under a warrant issued by the court, for it ensures the immediate application of a judicial mind to the legal authority of the person making the arrest and the regularity of the procedure adopted by him.
In the case of, arrest under a warrant issued by a court, the judicial mind had already been applied to the case when the warrant was issued and, therefore, there is less reason for making such production in that case a matter of a substantive fundamental right.
It is also perfectly plain that the language of article 22(2) has been practically copied from sections 60 and 61 of the Code of Criminal Procedure which admittedly prescribe the procedure to be followed after a person, has been arrested without warrant.
The requirement of 'article 22(1) that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest indicates that the clause really contemplates an arrest without a warrant of court, for, as already noted, a person arrested under a, court 's warrant is made acquainted with the grounds of his arrest before the arrest is actually effected.
There can be no doubt that the right to consult a legal practitioner of his choice is to enable the arrested person to be advised about the legality or sufficiency of the grounds for his arrest.
The right of the arrested person to be defended by a legal practitioner of his choice postulates that there is an accusation against him against which he has to be defended.
The language of article 22(1) and (2) indicates that the fundamental right conferred by it gives protection against such 269 arrests as are effected otherwise than under a warrant issued by a court on the allegation or accusation that the arrested person has, or is suspected to have, committed, or is about or likely to commit an act of a criminal or quasi criminal nature or some activity prejudicial to the public or the State interest.
In other words, there is indication in the language of article 22(1) and (2) that it was designed to give protection against the act of the executive or other non judicial authority.
The Blitz case (Petition No. 75 of 1952), on which Sri Dadachanji relies, proceeds on this very view, for there the arrest was made on a warrant issued, not by a court, but, by the Speaker of & State Legislature and the arrest was made on the distinct accusation of the arrested person being guilty of contempt of the Legislature.
It is not, however, our purpose, nor do we consider it desirable, to attempt a precise and meticulous enunciation of the scope and ambit of this fundamental right or to enumerate exhaustively the cases that come within its protection.
Whatever else may come within the purview of article 22(1) and (2), suffice it to say for the purposes of this case, that we are satisfied that the physical restraint put upon an abducted person in the process of recovering and taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under section 4 of the impugned Act cannot be regarded as arrest and detention within the meaning of article 22(1) and (2).
In our view, the learned Judges of the High Court over simplified the matter while construing the article, possibly because the considerations hereinbefore adverted to were not pointedly brought to their attention.
Our attention has been drawn to sections loo (search for persons wrongfully confined) and 552 (power to compel restoration of abducted females) of 270 the Code of Criminal Procedure, and it has been urged that neither of those sections contemplates an accusation against the victim and yet such victim, after recovery, has to be brought before a Magistrate.
It is to be observed that neither of the two sections treats the victim as an arrested person for the victim is not produced before a Magistrate under sections 60 and 61 'which require the production of a person arrested without warrant, or under section 81 which directs the production of a person arrested under a warrant issued by a, court.
The recovered victim is produced by reason of special provisions of two sections,, namely, sections 100 and 552.
These two sections clearly indicate that the recovery and taking into custody of such a victim are, not regarded as arrest at all within the meaning of the Code of Criminal Procedure and, therefore, cannot also come within the protection of article.
22(1) and (2).
This circumstance also lends support"to the conclusion we have reached, namely, 'that the taking into custody of an abducted person under the impugned Act is not an arrest within the meaning of article 22(1) and (2).
Before the Constitution, came into force it was entirely for the Legislature to consider whether the recovered person should be produced before a Magistrate as is provided by sections 100 and 552 of the Criminal Procedure Code in the case of persons wrongfully confined or abducted.
By this Act, the Legislature provided that the recovered Muslim abducted person should be taken straight to the officer in charge of the camp, and the Court could not question the wisdom of the policy of the Legislature.
After the Constitution, article 22 being out of the way, the position in this behalf remains the same.
Sri Dadachanji also argued that the Act is inconsistent with article 14.
The meaning, scope and ambit of that article need not be explained again, for they have already been explained by this Court on more than one occasion.
[See Chiranjit Lal Chowdhury vs The Union of India (1), The State of Bombay vs F. N. (1) ; 271 Balsara (1), The State of West Bengal vs Anwar Ali Sarkar (2), and Kathi Raning Rawat vs The State of Saurashtra (3)].
There can be no doubt that Muslim abducted persons constitute a well defined class for the purpose of legislation.
The fact that the Act is extended only to the several States mentioned in section 1 (2) does not make any difference, for a classification may well be made on a geographical basis.
Indeed, the consent of the several States to the passing of this Act quite clearly indicates, in the opinion of the governments of those States who are the best judges of the welfare of their people, that the Muslim abducted persons to be found in those States form one class having similar interests to protect. ' Therefore the inclusion of all of them ' in the definition of abducted persons cannot be called discriminatory.
Finally, there is nothing discriminatory in sections 6 and 7.
Section 7 only implements the decision of the Tribunal arrived at under section 6.
There are several alternative things that the Tribunal has been authorised to do.
Each and everyone of the abducted persons is liable to be treated in one way or another as the Tribunal may determine.
It is like all offenders under a particular section being liable to a fine or imprisonment.
There is no discrimination if one is fined and the other is imprisoned, for all offenders alike are open to the risk of being treated in one way or another.
In our view, the High Court quite correctly decided this question against the petitioner.
The learned counsel for the respondent Ajaib Singh contended that the Act was inconsistent with the provisions of article 19(1)(d) and (e) and article 21.
This matter is concluded by the majority decision of this court in Gopalan 's case (4) and 'the High Court quite correctly negatived this contention.
Sri Dadachanji has not sought to support the views of Bhandari J. regarding the Act being inconsistent with article 19 (1)(g).
Nor has learned counsel (1) ; (3) ; (2) ; (4) ; 272 seriously pressed the objection of unconstitutionality based on article 15, which, in our view, was rightly rejected by the High Court.
Although we hold that the High Court erred on the construction they Put upon article 22 and the appellant has succeeded on that point before us, this appeal will, nevertheless, have to be dismissed on the ground that the Tribunal was not properly constituted and its order was without jurisdiction, as conceded by the learned Solicitor General.
We, therefore, dismiss this appeal on that ground.
We make no order as to costs.
| The Abducted Persons (Recovery and Restoration) Act (Act LXV of 1949) does Dot infringe article 14, article 16, article 19 (1) (d), (e) and (g), article 21 or article 22 of the Constitution and is not unconstitutional on the ground that it,contravenes any of these provisions.
The physical restraint Put upon an abducted person in the process of recovering and, taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under section 4 of the Abducted Persons (Recovery and Restoration) Act (LXV of 1949) is not arrest and detention within the meaning of article 22 (1) and (2) of the Constitution.
The said Act does not therefore infringe the fundamental right guaranteed by article 22 of the Constitution.
255 The fundamental right conferred by article 22 gives protection ,against such arrests as are effected otherwise than under a warrant issued by a Court on the allegation or accusation that the arrested person has, or is suspected to have,.
committed, or is about or likely to commit, an act of a criminal or quasi criminal nature or some activity prejudicial to the public or the State interest.
There is indication in the language of article 22 (1) and (2) that it was designed to give protection against the act of the exe cutive or other non judicial authority.
The Blitz Case (Petition No. 75 of 1952) explained.
Muslim abducted persons constitute a well defined class for the purpose of legislation and the fact that the Act is extended only to the several States mentioned in section 1 (2) of the Act does not make any difference, for a classification may well be made on a geographical basis.
The Act does not therefore contravene article 14 of the Constitution.
If the language of an article is plain and unambiguous and admits of only one meaning, then the duty of the Court is to adopt that meaning irrespective of the inconvenience that such a construction may produce.
If, however, two constructions are possible then the Court must adopt that which will ensure smooth and harmonious working of the Constitution and, eschew, the other which will lead to absurdity or give rise to practical inconvenience or make well established provisions of existing law nugatory.
|
399 of 1952.
Petition under article 32 of the Constitution of India for a writ in the nature of habeas corpus, Godavari Parutekar, the petitioner, in person.
M. C. Setalvad, Attorney General for India, (G.N. Joshi and P. A. Mehta, with him) for the respondent.
December 5.
The Judgment of the Court was delivered by BosE J.
This is a habeas corpus petition under article 32 of the Constitution.
The petitioner was detained the, 16th of October, 1951, under the of 1950 as amended in 1951.
Her detention was actually longer than this but the earlier detentions were under a different set of orders which are not relevant to the present matter.
The present detention is based an order of the District Magistrate, Thana, and merely says that the petitioner be detained, without specifying any period.
The order of confirmation was passed the 4th of January, 1952, and there again no period was specified.
The petitioner 's case is that as no period was specified in the order her period of detention expired the 31st of March, 1952, because of the amending Act of 1951 ; or at the outside the 30th of September, 1952, because of Act XXXIV of 1952 which effected a further amendment.
The reply behalf of the State of Bombay is that the of 1950 was again amended by Act LXI of 1952 and that the effect of this amendment was to carry the petitioner 's detention to the 31st of March, 1953, because of section 11 A which was added to the original Act of 1950.
The petitioner counters by saying that the new Act does not apply to cases in which the order of detention is not silent about its duration and so section 11 A does not serve to extend the period of her detention.
She relies the following portion of section II A (2) ". every detention order which has been confirmed under section 11 before the commencement of the Preventive Detention (Second Amendment) Act 1952, shall, unless a shorter priod is specified in the order, continue to remain in force until the Ist day of April, 1953. " The petitioner concedes that no shorter period is specified in her order of detention but contends that as her detention would have expired either the 31st of March, 1952, or the 30th of September, 1952, one of those two dates must now be read into the order and when that is done we have an order which specifies as shorter period, therefore section 11 A (2) does not serve to extend her detention.
We are unable to accept this contention.
The section is clear and unless a shorter period is specified in the order, section I 1 A(2) applies.
We cannot add the words "or must be deemed to have been specified by reason of the expiry of the earlier Act" into the section.
We hold therefore that section 11 A(2) validly extended the period of detention till the Ist of April, 1953.
1 The petitioner 's next point is based articles 14 and 22(i)(b) of the Constitution. ' It arises in this way.
Section 3 (1) (a) of the of 1950 classifies grounds of permissible detention into three categories.
Article 22 (7) (b) empowers Parliament to prescribe the maximum period for which any person may "in any class or classes of cases" be detained.
The petitioner argues that this permits only one maximum for each class and that if different maxima are provided for "equals" within a class it offends not only article 22 (7) (b) but also article 14 as interpreted by the decisions of this Court, She next argues that section 11 A, now introduced by the second amending Act of 1952 (Act LXI of 1952), does just that and so is ultra vires.
Her point is put as follows.
Sub section (1) of section 11 A states that the maximum period for which any person may be detained in pursuance of any detention order which has been confirmed under section 1 1 shall be twelve months from the date of detention.
But sub section (2) qualifies this by dividing detentions into two classes; 213 (a) those in which the detention order was confirmed before 30th of September, 1952, and (b) those in which the confirmation was after that date, and it provides that.
in the former case, unless a shorter period is specified in the order, the detention shall continue either till the 1st of April, 1953, or for twelve months from the date of detention, whichever expires later.
This, she says, introduces a fresh classification which divides detentions into those before the Act and those after.
That, she says, is ultra vires, first, because it introduces a discriminatory classification in the class to which she belongs under section 3 of the Act and, second, because it entails discrimination even in the fresh class into which she has been thrown by the new sub division, made by the second amending Act of 1952.
As regards the first point, the ratio decidendi in Shamrao V. Parulekar vs The District Magistrate, Thana, and Others(1) applies here.
In that case, detentions were divided into those which had already been considered by an Advisory Board and those which had not.
This was upheld.
The dividing line here is different, namely a certain date, but the principle is the same and its reasonableness is apparent from a consideration of the various amendments which have been made from time to time.
The life of the Act of 1950, which was the principal Act, was extended till the 1st of October, 1952, by section 2 of the amending Act (Act XXXIV of 1952), and the effect of section 3 was to prolong the ' life of all detentions in force on 14th of March 1952, (provided they had been confirmed before that date) for so long as the principal Act was in force.
At that date this meant till the 1st of October, 1952.
But the second amending Act of 1952 extended the life of the principal Act till the 31st of December,1954.
Therefore, in the absence of section 11 A all those detentions would have been extended till that date.
But section 11 A modified that and put 1st of April,1953, as the latest date for these old detentions, (1) ; at 691 and 693.
214 It therefore conferred a benefit and cannot be deemed unreasonable.
Sub section (3) of 'section 11 A shows that that was the object.
But the petitioner attacked the provisions on the ground of discrimination.
She said that even assuming the new classification of detentions into those before and after the 30th of September, 1952, to be good, section 11 A is nevertheless discriminatory because it discriminates amongst those in her class,, namely those whose detentions were made and confirmed before the 30th of September.
She put it in this way.
Taking the case of her own detention, she pointed, out that if section II A is good, it will continue till the 1st of April, 1953, that is to say, her detention will have been for a period of 17 1/2 months from the 16th of October, 1951, till the 1st of April, 1953. 'On the other hand, a person detained after her on, say, the last of September, 1952, would also be due for release on the 1st of April, 1953, and so would have had only six months ' detention.
This, in our opinion, is not discrimination within the meaning of article 14.
A maximum can be fixed, either by specifying a particular period, such as twelve months, or by setting an outside limit, land it is inevitable in such a case that the length of detention will vary in each individual case.
Those taken into detention at a later date are bound to be detained for a shorter time.
Government is not bound to detain everybody for the same length of time.
, It has a discretion.
Moreover, the appropriate Government has boon left power to revoke or modify the detention order at any earlier time.
This point was considered in Shamrao V. Parulekar vs The District Magistrate, Thana, & Others (1) and was decided against the detenu.
The petitioner endeavoured to have her application reopened on the merits contending again that the grounds of detention are vague.
She relies on Shamrao V. Parulekar vs The State, of Bombay (2) where (1) ; at 691 at 693.
(2) Petition No. 86 of 1952.
215 another detenu was released by another Bench of this Court in circumstances which., according to her, are very similar.
We are unable to allow this as her petition has already been rejected on the merits.
She was only allowed to appear on constitutional points.
We understand that in the other petition this fact was not brought to the notice of the Court.
The application is dismissed.
Application dismissed.
| Section 11 A which was inserted in the of 1950 by the Preventive Detention (Second Amendment) Act, 1952, provided that the maximum period for which any person may be detained in pursuance of any detention order which has been confirmed under section 11 shall be twelve months from the date of detention.
But subs.
(2) qualified this by dividing do tentions into two classes: (a) those in which the detention order was confirmed before the 30th September, 1952, and (b) those in which the confirmation was after that date, and it provided that in the former case, unless a shorter period was specified in the order, the detention shall continue either till the 1st of April, 1953, or for twelve months from the date of detention, whichever expires later: I Held, (i) that the section did not contravene article 14 or article 22 (7) (b) of the Constitution merely because it introduced a fresh classification which divided detentions into those before the Act and those thereafter, as the classification was a reasonable one.
The section did not involve any discrimination between persons whose detentions were confirmed before the 30th September, 1952, Merely because, as a result o f the section, in the case of some persons the period of detention may be longer and in the case of others it may be shorter; Shamrao Parulekar vs The District Magistrate, Thana and Others ( ; followed.
(ii)that a detention order made the 16th October, 1951, which did not specify any period of detention was not a case where " a shorter period was specified in the order " within the meaning of section 11 A (2) merely because the detention would have expired either ' the 31st March, 1952, or 30th September, 1952, but for the Amendment Act.
|
Appeal No. 16 of 1952.
Appeal from the Judgment and Order dated February 6, 1951, of the High Court of Judicature at Madras (Rajamannar C. J. and Somasundaram J.) in Civil Miscellaneous Petition No. 11307 of 1950, arising out of Order dated November 10, 1950, made in C. No. 2216 A 3 49 on the file of the Regional Transport Authority, Tanjore.
G. R. Jagadisa Iyer for the appellant.
V. K. T. Chari, Advocate General of Madras, (V. V. Baghavan, with him) for the respondent.
December 5.
The Judgment of the Court was delivered by GHULAM HASAN J.
This appeal brought by special leave under article 136 (1) of the Constitution is directed against the order dated February 6, 1951, of the High Court of Judicature at Madras, dismissing the petition of the appellant under article 226, praying for the issue of a writ of certiorari to quash the order dated November 10, 1950, passed by the respondent in the following circumstances : The appellant is the lessee of a site in the town of Tanjore in the State of Madras upon which he has a bus stand.
The bus stand originally belonged to the Tanjore Municipality and the appellant merely held a licence from that authority.
Later on, the title of the Municipality to the site was questioned by a third party and in a civil litigation which ensued the title of the Municipality was negatived.
Thereupon the appellant obtained the lease hold right of the site from the true owner and constructed a bus stand conforming to the design approved by the Municipality.
Besides sheds for passengers and vehicles it provided other amenities.
It was situate near the Railway Station and most of the buses leaving Tanjore for 38 292 out station journeys used this bus stand both as the starting point and as the terminus.
It appears that the site was approved as convenient and suitable for the bus stand both by the Municipality and the District authorities for buses plying from and into Tanjore.
The appellant held the licence for running the bus stand year after year.
In 1939 the Municipality granted him a licence for four months only instead of one year as required by section 270 (c) of the Madras Municipalities Act (V of 1920), and the appellant succeeded in vindicating his right for a whole year 's licence in the Civil Court by obtaining the relief for injunction and an order directing the issue of a licence against the Municipality for 1940 41.
The appellant carried on the business without let or hindrance until 1950 when the Municipality refused to renew his licence, whereupon he obtained a mandatory injunction from 'the Civil Court directing the Municipality to grant him a licence for the year 1950 51.
This decree was passed on October 7, 1950.
On February 21, 1950, however, the Regional Transport Authority, Tanjore, which is the respondent in the present appeal, declared the bus stand as unsuitable with effect from April 1, 1950, and altered the starting and the terminal points from that date.
This order resulted in the closing of the appellant 's bus stand.
This decision which was given by means of a resolution was confirmed subsequently by another resolution passed on March 31, 1950.
The appellant challenged the validity of these resolutions by a petition under article 226 before the Madras High Court on the ground that they were passed without jurisdiction and were contrary to the principles of natural justice as they were passed without notice to the appellant and without giving him an opportunity to defend his right.
The resolutions purported to have been passed under section 76 of the , which runs thus: " The Provincial Government or any authority authorized in this behalf by the Provincial GovernMent ' may, in consultation with the local authority 293 having jurisdiction in the area concerned,determine places at which motor vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stop for a longer time than is necessary for the taking up and setting down of passengers." The Division Bench of the Madras High Court consisting of the learned Chief Justice and another learned Judge quashed the two orders as prayed for by the appellant on the grounds that the orders were passed ex parte, and that section 76 did not authorize, the respondent to close the bus stand.
In the opinion of the Bench, section 76 deals with provision for parking places and halting stations and has no applica tion to a permanent bus stand which is a sort of a radiating centre of all the bus traffic for the town.
It was held therefore that the Regional Transport Authority could not under section 76 fix starting and terminus places for motor buses.
Reference was made, in the course of the arguments, to rule 268, Madras Vehicles Rules, 1940, and the learned Judges observed that though the rule does empower the Transport Authority to fix starting places and termini between which public service vehicles other than motor cars shall be permitted to be used, but that this could be done only if starting places and termini had not already been fixed in accordance with the provisions of any statute.
In the present case as these had already been fixed in accordance with rule 27 D, Motor Vehicles Rules, 1923, the Transport Authority could not fix new starting places and termini under rule 268 of the Rules passed in 1940.
The Bench pointed out that the rule was defective and would lead to an impasse if the starting places and termini already fixed become unsuitable and have to be shifted.
Accordingly they suggested that the rule should be amended and a provision introduced conferring on the appropriate 294 authority the requisite power to alter from time to time the starting places and termini.
See T. E. Ebrahim Saheb vs The Regional Transport Authority Tanjore(1).
It appears that within two months of the decision of the High Court rule 268 was amended by the Government.
Before the decision of the High Court was given the bus stand was shifted to a place belonging to the Municipality in another area.
Rule 268 as it originally stood ran thus: " In the case of public service vehicles (other than motor cabs) if starting places and termini have not been fixed in accordance with the provisions of any statute, the transport authority may, after consultation with such other authority as it may deem desirable, fix starting places and termini between which such vehicles shall be permitted to be used within its jurisdiction.
A list of such places shall be supplied by such authority to every holder of a permit for such vehicles.
When such places have been fixed, every such vehicle shall start only from such places.
" By the amendment the words " if starting places and termini have not been fixed in accordance with the provisions of any statute " were deleted, and the words " and after notice to the parties affected, fix or alter from time to time for good and proper reasons," were added.
As amended, the rule runs thus: " 268.
In the cage of public service vehicles (other than motor cabs) the transport authority may after consultation with such other authority as it may consider desirable, and after notice to the parties affected, fix or alter from time to time for good and proper reasons, the starting places and termini between which such vehicles shall be permitted to be used within its jurisdiction.
A list of such places shall be supplied by such authority to every holder of a permit for such vehicles at the time of grant of or renewal of permits.
(1) A.I.R. 951 Mad. 419.
295 When such places have been fixed every such: vehicle shall start only from such places.
" The respondent then issued a notice to the appellant on October 25, 1950, to show cause why the bus stand should not be shifted, the grounds given being that it was not satisfactorily maintained and was situated in a limited space which was inadequate to accommodate all the buses using the stand and that it did not permit of any improvements being carried out.
The appellant filed a long written statement objecting to the notice and challenging the grounds, whereupon the respondent issued a fresh notice on November 2, 1950, in which the original grounds were dropped and were substituted by the ground "from ' the point of convenience of the travelling public".
After hearing the appellant and the Municipality, the Board passed a resolution on November to, 1950, that for good and proper reasons, namely, the convenience of the travelling public, the Transport Authority had resolved to alter the starting places and termini of all public service vehicles (other than motor cabs) arriving, at and proceeding from Tanjore from the existing bus stand owned by the appellant to the Municipal bus stand in another area of the town.
This order led to another petition being filed in the High Court at Madras, praying for a writ of certiorari under article 226.
The appellant questioned the jurisdiction of the Transport Authority to pass the order in question.
It was contended before the High Court that rule 268 as amended was itself ultra vires, firstly, because it was beyond the rulemaking power conferred by section 68, sub section (r), of the , and secondly because it was repugnant to article 19(1)(g) of the Constitution.
Both these contentions were rejected by the High Court and the petition was dismissed.
The contentions raised before the High Court have been repeated before us.
We are satisfied that there is no good ground for differing from the view taken by the High Court.
The contains 10 Chapters.
Chapter IV of the Act deals with 296 control of transport vehicles.
Section 4 7 (1) lays down that the Regional Transport Authority shall, in deciding whether to grant or refuse a stage carriage permit, have regard to the following matters, namely, (a) the interest of the public generally; (b) to (f). . . . . . . .
Section 48 says that the Regional Transport Authority after consideration of the matters set forth in section 47, may attach to a stage carriage permit any prescribed condition or any one or more of the following conditions.
Various conditions are set out one of which (v) is material for our purposes.
It is to the effect " that within Municipal limits and in such other areas and places as may be prescribed, passengers shall not be taken up or set down at or except at specified points.
" The material portion of section 68 may be set out here: "(1) A Provincial Government may make rules for the purpose of carrying into effect the provisions of this Chapter.
(2) Without prejudice 'to the generality of the foregoing power, rules under this section may be made with respect to all or any of the following matters, namely: (r) prohibiting the picking up or setting down of passengers by stage or contract carriages at specified places or in specified areas or at places other than duly notified stands or halting places. . . ; " It is obvious from a plain reading of sub section (1) that the Government has got full power to make rules for the purpose of carrying into effect the.
provisions contained in Chapter IV relating to the control of transport vehicles and according to subsection (2), without prejudice to this power, the Government has the power to frame rules with respect to matters set out in sub sections (2) (a).
to (2) (za).
It is significant to note that the Act does not follow the ordinary mode of providing at the end of the Act that the Government is empowered to make rules for the 297 purpose of carrying into effect the provisions of the Act but at the end of each of the Chapters, including Chapter IV, the power has been reserved to the Provincial Government to make rules for the purpose of carrying into effect the provisions of the Chapter.
The purpose of Chapter IV is described by the compendious expression "control of transport vehicles" and the Provincial Government is invested with plenary powers to make rules for carrying out that purpose.
Keeping in view the purpose underlying the Chapter we are not prepared to hold that the fixing or alteration of bus stands is foreign to, that purpose.
It was contended that section 68, sub section 2(r), does not confer the power upon the transport authority to direct the fixing or the alteration of a bus stand and that rule 268 of the rules framed under that section was, therefore, ultra vires.
We are not prepared to accede to this contention.
Sub section 2(r) clearly contemplates three definite situations.
It prohibits the picking up or setting down of passengers (i) at specified places (ii) in specified areas, and (iii) at places other than duly notified stands or halting places.
If the power to make rules in regard to these, matters is given to the Government, then it follows that a specified place may be prohibited from being used for picking up or setting down passengers.
This will inevitably result in the closing of that specified place for the purpose of picking up or setting down of passengers.
Similarly a specified area may be excluded for the same purpose.
The expression "duly notified stands" is not defined in the Act, but it is reasonable to presume that a duly notified stand must be one which is notified by the Transport Authority and by none other.
There is no warrant for the presumption that it must be notified by the Municipality. ' Reference was Made to section 270(b), 270(c) 298 270(e), 1, 2 & 3 of the Madras District Municipalities Act (V of 1920), and it was argued that the authority which is clothed with a power to fix a stand is the Municipality.
Section 270(b) empowers the Municipal Council to construct or provide halting places and cart stands, and the latter according to the Explanation appended to the section includes a stand for motor vehicles as well.
Section 270(c) merely says that where a Municipal Council has provided a public landing place, halting place or cartstand, the executive authority may prohibit the use for the same purpose by any person within such distance thereof, as maybe determined by the Municipal Council, of any public place or the sides of any public street.
Section 270(e) lays down that no person can open a new private cart stand or continue to keep open a private stand unless he obtains from the Council a licence to do so.
These provisions do not affect the power of the Transport Authority to regulate traffic control or impose restrictions upon the licence of any such cart stand.
If rule 268 is therefore within the power of the rule making authority, it follows that it cannot be challenged as being void because it is not consistent with some general law.
Reliance was placed on a passage at page 299 of, Craies on Statute Law as laying down that a by law must not be_repugnant to the statute or the general law.
But by laws and rules made under a rule making power conferred by a statute do not stand on the same footing, as such rules are part and parcel of the statute itself.
Section 68, subjection 2(r), involves both s general prohibition.
that the stand will cease to exist as well as a particular prohibition, namely that passengers shall not be picked up or set down at a specified point.
The order passed by the Transport Authority properly construed falls within the ambit of section 68, sub section 2(r).
Rule 268 under which the order impeached was passed is rule framed under the plenary rule making 299 power referred to in section 68, sub section (1).
Sub section (2) (za) says that a rule may be made with respect to any other matter which is to be or may be prescribed.
This shows the existence of residuary power vested in the rule making authority.
It follows therefore that rule 268 is within the scope of the powers conferred under section 68 of the Act.
The next contention was that the order is repugnant to article 19 (1) (g) of the Constitution, according to which all citizens must have the right to practise any profession or to carry on any occupation, trade or business.
It cannot be denied that the appellant has not been prohibited from carrying on the business of running a bus stand.
What has been prohibited is that the bus stand existing on the parti cular site being unsuitable from the point of view of public convenience, it cannot be used for picking up or setting down passengers from that stand for outstations journeys.
But there is certainly no prohibition for the bus stand being used otherwise for carrying passengers from the stand into the town, and vice versa.
The restriction placed upon the use of the bus stand for the purpose of picking up or setting down passengers to outward journeys cannot be con sidered to be an unreasonable restriction.
It may be that the appellant by reason of the shifting of the bus stand has been deprived of the income he used to enjoy when the bus stand was used for outward journeys from Tanjore, but that can be no ground for the contention that there has been an infringement of any fundamental right within the meaning of article 19 (1) (g) of the Constitution.
There is no fundamental right in a citizen to carry on business wherever he chooses and his right must be subject to any reasonable restriction imposed by the executive authority in the interest of public convenience.
The restriction may have the effect of eliminating the use to which the stand has been put hitherto but the restriction cannot be regarded as being unreasonable if the authority imposing such restriction had the power to do so.
Whether the abolition of the stand 39 300 was conducive to public convenience or not is a matter entirely for the transport authority to judge, and it is not open to the court to substitute its own opinion for the opinion of the authority, which is in the beat position, having regard to its knowledge of local conditions to appraise the situation.
It was next contended that rule 268, if it is held to be intra vires, was not complied with as the Transport Authority could pass such an order only after consultation with such other authority as it may deem desirable.
It is admitted that the Transport Authority;consulted the Municipality before passing the order in question.
Rule 268 therefore was fully complied with.
But then it is urged that the Municipality was not the proper authority in the circumstances as it was a partisan to the dispute and had been endeavouring to oust the appellant from the bus stand in order to set up its own bus stand.
The Municipality is a public body interested in public welfare and if it sought the assistance of the Government or the Transport Authority to shift the busstand, it was actuated only by the demands of public interest.
It was possible for the Transport Authority to consult the District Board or the Panchayat as suggested for the appellant, but it was not bound to do so.
We do not think that in consulting the Municipality the Transport Authority acted otherwise than within the scope of its powers.
Further, according to the language employed the consultation is not obligatory but only discretionary.
It was suggested that the act of the Municipality was mala fide and reference was made to paragraphs 18 and 19 of the appellant 's affidavit dated November 20, 1950.
They refer merely to the vagueness of the ground of public convenience and to he amendment of the rule not being bona fide.
There is, however, no material to support this suggestion.
The mere fact that in the first notice certain grounds were mentioned which were not adhered to in the second notice and convenience of the travelling public was alone mentioned as the ground cannot lead to the 301 inference that the order was mala fide.
The rule was amended in pursuance of the suggestion of the High Court in order to overcome the difficulty which arose in the absence of requisite power to alter the busstands.
It is significant that no allegation about mala fides was made before the High Court and the question was never discussed there.
In the petition for special leave to appeal though there is reference to the ground of inconvenience being vague, yet there is no suggestion of mala fides.
The question about mala fides appears to have been raised for the first time in paragraph 4 (f) and (g) of the statement of the case.
We hold that the plea of mala fides has not It was also urged that the resolution is invalid as the District Collector who presided over the meeting of the Transport Authority which passed this resolution had opened the new Municipal bus stand on April I, 1950.
The suggestion is that be did not bring to bear upon the question an impartial and unbiased mind.
The District Collector was not acting in the exercise of judicial or quasi judicial functions so that his action can be subjected to the scrutiny which is permissible in the case of a judicial officer.
He, was acting purely in his executive capacity and his conduct in presiding over the meeting of the Transport Authority in the exercise of his normal functions and also opening the Municipal stand which he was entitled to do as the head of the District, does not affect the validity or fairness of the order complained against.
We do not think there is any merit in this contention.
Accordingly we dismiss the appeal with costs.
Appeal dismissed.
| Rule 268 of the Madras Motor Vehicles Rules, 1940, as it originally stood did not empower the Transport Authority to alter from time to time the starting places and termini for motor vehicles.
The rule was amended in 1950 so as to empower the Transport Authority to do so, and after giving notice to the appellant who was the owner of a bus stand in a municipality, which was being used for several years as the starting place and terminus for motor buses plying to and from the municipality, the Transport Authority passed a resolution changing the starting place and terminus for the convenience of the public.
The appellant applied for a writ of certiorari contending that r. 268 as amended was ultra vires as it went beyond the rule making powers conferred by section 68 (2) (r) of the and was also repugnant to article 19 (1) (g) of the Constitution: Held, (i) that the fixing and alteration of bus stands was not a purpose foreign to the " control of transport vehicles ", the purpose for which rules could be made under section 68 (1), and the power to make rules prohibiting the picking up or setting down of passengers at specified places mentioned in section 68 (2) (r) necessarily included the power to alter the situation of bus stands, and r. 268 as amended did not therefore go beyond section 68 (2) (r) ; (ii) the restriction placed upon the use of the bus stand for the purpose of picking up or getting down passengers to or from outward journeys cannot be considered to be an unreasonable restriction on the right to carry on any profession, trade or business of the appellant, and r. 268 was not in any way repugnant to article 19 (1) (g) of the Constitution.
The expression " duly notified stand " in the Madras means a stand duly notified by the Transport Authority.
There is no warrant for the view that it means a stand 291 notified by the municipality.
The provisions of section 270 (b), (c) and (e) do not affect the power of the Transport Authority to regulate traffic control or impose restrictions upon the licence of cart stands.
|
Appeal No. 63 of 1952.
Appeal from the Judgment and Order dated 7th November, 1950, of the High Court of Judicature at Hyderabad (Siddique, Rao and Deshpande JJ.) in Civil Case No. 9 A 5 1 of 1950.
M. C. Setalvad, Attorney General for India, and C. K. Daphtary, Solicitor General for India (G. N. Joshi and Ghulam Ahmad Khan, with them) for the appellants.
B. Somayya and Akbar Ali Khan (B. V. Subharayudu, with them) for the respondents.
December 9.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal which has come before us on a certificate granted by the High Court of Hyderabad under article 132 (1) of the Constitution is directed against a judgment of a Full Bench of that Court dated November 7, 1950, passed on a petition under article 226 of , the Constitution.
By this judgment the learned Judges of the High Court declared an Act, known as the Waliuddowla Succession Act of 1950, void under article 13(2) of the Constitution to the extent that it affected the 'rights of the present, respondents 1 to 12 who were the petitioners 'in the article 226 proceeding.
The object of the impugned Act, which received the assent of H.E.H. the Nizam as Rajpramukh of Hyderabad on April 24, 1950, was to put an end to the disputes that existed at the time regarding succession to the matrooka or personal estate of Nawab Waliuddowla ', 'a wealthy nobleman and a high dignitary of Hyderabad, and what, in substance, the Act provided was to dismiss the claims of succession to the said properties put forward by two of the alleged wives of the late Nawab, named Mahboob Begum and Kadiran Begum, and their children.
These two ladies as Well as their 406 children filed a petition before the Hyderabad High Court under article 226 of the Constitution challenging the validity of the Act mentioned aforesaid inter alia on the grounds that it conflicted with the petitioners ' fundamental rights guaranteed under articles 1419(1)(1) and 31(1) of the Constitution and praying for appropriate reliefs by way of declaration and writs of certiorari and prohibition.
The claim was resisted by Ameerunnissa Begum, an admitted wife of the late Nawab, and her children, and they are the persons who would primarily be benefited by the provisions of the impugned Act.
The High Court ,substantially accepted the contentions of the petitioners and declared the Act to be void so far as it affected them.
Against this decision the present appeal has been taken to this court by Ameerunnissa Begum and her children.
To appreciate the contentions that have been raised by the parties, a brief resume of the antecedent events leading up to the passing of the disputed legislation would be necessary.
Nawab Waliuddowla, who was one of the Paigah noblemen of Hyderabad and was at one time, the President of the Executive Council of the State, died at Medina on February 22, 1935, while on a pilgrimage to Hedjaz.
Besides extensive jagir properties appertaining to the Paigah which fetched him an annual income of nearly Rs. 1,36,000 he left behind him matrooka or personal estate of considerable value.
As regards the surviving relations of the Nawab, who could claim rights by inheritance to his estate, it is not disputed that Ameerunnissa Begum was one of the legaly wedded wives of the Nawab and that she and the five children which the Nawab had by her are entitled to their legitimate shares in the properties left by the deceased, There is also no dispute that the Nawab went through a legal marriage with a lady named Fatima Begum who is still alive.
It appears, however, that she left her husband soon after marriage and did not return to him any time thereafter.
During the period, which is material for our present purpose, the 407 only claim which she put forward against the estate of the Nawab was one for recovery of her dower debt &mounting to one lakh of rupees.
The whole dispute between the parties to this litigation really centered round the point as to whether the other two ladies, namely Mahoob Begum and Kadiran Begum,who are respectively respondents I and 5 in this appeal, were, the lawfully married wives of the late Nawab or were they merely in his keeping as.
kavases or permanent concubines? If there was no legal marriage between them and the Nawab, it is not disputed that their children, though admittedly begotten on them by the Nawab, would not be entitled to any share in the matrooka or personal estate left by the deceased.
, This dispute first arose before the Paigah Trust Committee whose duty it was to distribute the income of the Paigah estate amongst the heirs of the late Nawab.
In April, 1935, shortly after Ameerunnissa Begum, who had accompanied her husband to Mecca, returned to Hyderabad after the death of the latter, the Committee addressed letters to Ameerunnissa Begum, Fatima Begum and also to Mahboob Begum enquiring about the wives and children left, by the Nawab.
No letter, it seems, was sent to Kadiran Bi.
On a consideration of the replies given by the several addressees and also of the statements made on their behalf at the hearings before the Committee, the latter submitted a report to the Executive Council of the Nizam.
The Paigah Committee proceeded on the footing that the Nawab 's marriage with Ameerunnissa Begum was beyond dispute, but as Mahboob Begum did not produce her marriage certificate even after repeated demands by the Committee, she as well as Kadiran Bi were treated as concubines.
The Committee recommended that the annual income of the Paigah should be divided in the proportion of 60 to 40 amongst the legitimate and illegitimate relations of the Nawab 60% of the income was to go to Ameerunnissa Begum and her issues and the remaining 40% was to be paid to Mahboob and Kadiran as well as to 53 408 their children.
These recommendations were approved by the Nizam in a Firman dated 9th July, 1936.
Previous to this, express intimations were given to the surviving relations of Waliuddowla under orders of the Nizam that whatever disputes might exist among them regarding the matrooka or personal estate of the Nawab, should be decided by proper proceedings in a court of law and pending such decision the estate might be kept ' under the supervision of the Paigah Committee.
On the 8th February, 1938, Mahboob Begum and her children filed a suit in the Dar ul Quaza, which was a court established under the law for deciding rights of succession, marriage, divorce etc.
of the Muslims in the Hyderabad State, praying for a declaration that Mahboob Begum was the legally married wife of the Nawab and the children were his legitimate children and for other consequential reliefs in the shape of participation in the matrooka and recovery of the dower debt payable to Mahboob Begum.
Both Ameerunnissa Begum and Kadiran Bibi as well as their children were among the defendants impleaded in the suit.
During the pendency of the suit and before it came on for actual hearing, there was a Firman issued by the Nizara on the 9th February, 1937, on the application of Ameerunnissa Begum, directing the withdrawal of the suit from the Dar ul Quaza court and the appointment of a Special Commission consisting of Nawab Jiwan Yar Jung, the then Chief Justice of Hyderabad and the Judge of Dar ul Quaza before whom the suit was pending, to investigate the matter and submit a report to the Nizam through the Executive Council.
Proceedings before the Special Commission commenced on 27th March,1939.
Kadiran Bibi filed a plaint before the Commission claiming on behalf of herself and her children the identical reliefs which were claimed by Mahboob Begum and her children, and though this plaint was at first rejected by the Commission it was subsequently entertained under specific orders of the Executive Council.
It appears that Fatima Bibi also lodged a plaint in respect of 409 her Mahar against the estate of the Nawab and ,this matter was also directed to be investigated by the Commission.
The enquiry before the commission was a long affair in which a large volume of evidence, both oral and documentary, was adduced.
The Commission submitted the report on October 16, 1944, and their findings, in substance, were that both Mahboob Begum and Kadiran Begum were legally married wives of Waliuddowla and hence they as well as their children were entitled to have their legitimate shares in the matrooka.
Fatima Begum was also held to be a legally wedded wife of the Nawab, and as such entitled to the dower claimed by her.
When the report came up for consideration by the Executive Council the Members of the Council were divided in their opinion.
A minority was in favour of accepting the findings of the Commission but the majority view was that further expert opinion should be taken in the matter.
Eventually on the advice of the Council the Nizam directed by his Firman dated 27th August, 1945, that the report of the Special Commission should be scrutinised by an Advisory Committee consisting of three persons, namely, two Judges of the High Court and the Legal Adviser of the State.
This Committee was directed to examine fully the bulky report of the Special Commission and submit their opinion with a view to assist the Executive Council in coming to their decision.
They were not to take any fresh evidence or hear any further arguments from the parties.
The Advisory Committee submitted their report on 24th November, 1945, and the Committee held differing from the view taken by the Special Commission that neither Mahboob Begum nor Kadiran Begum was the legally wedded wife of Nawab Waliuddowla.
Despite this report, the majority of the Executive Council recommended that the findings of the Special Commission should be accepted.
The Nizam accepted this recommendation and by his Firman dated 26th June, 1947, directed that the findings of the Special Commission should be implemented at an early date.
410 There was a proposal at the beginning that the members of the Special Commission themselves should be asked to implement their findings, but eventually it was decided by a resolution of the Executive Council dated 22nd September, 1947, that the task of en forcing the recommendations of the Commission should be entrusted to the Chief Justice of the Hyderabad High Court.
It appears that in subsequent communications to the Executive Council the Nizam expressed doubt regarding the status of Mahboob Begum and Kadiran Begum and suggested the replacement of the Firman of 26th June, 1947, by now orders in the nature of a compromise.
The Executive Council, however, stuck to their decision and on 17th June, 1948, the findings of the Special Commission were transferred to the Chief Justice for executing the same as early as possible.
On 2nd July, 1948, another Firman was issued by the Nizam directing that the Chief Justice before making the final distribution of the matrooka should submit his report through the Executive Council to His Exalted Highness for his sanction.
This direction was embodied in a resolution of the Executive Council dated 2nd September, 1948.
The police action in Hyderabad commenced soon after that and it was on 25th September, 1948, after the police action had terminated and a Military Governor was placed in charge of the Hyderabad State that a formal communication of the resolution mentioned above was made to the Chief Justice.
Soon afterwards on the application of Ameerunnissa Begum made to the Military Governor the execution proceedings before the Chief Justice were stayed by an order dated 16th October, 1948.
This stay order was again cancelled on 5th November, 1948, and the execution proceedings were allowed to continue.
On 5th December, 1948, the Chief Justice submitted his report regarding the distribution of the matrooka to the Executive Council.
Strangely, however, by a Firman dated 24th February, 1949, the Nizam purporting to set under the advice of the Military 411 Governor directed that the findings of the three men Advisory Committee, who differed from the views taken by the Special Commission, should be given effect to.
In other words, the claims of Mahboob Begum and Kadiran Begum were dismissed and Ameerunissa Begum was directed to pay one lakh of rupees to Fatima, Begum as the dower due to the latter.
Protest was lodged against the decision by Mahboob Begum and Kadiran Begum and again a Firman was issued by the Nizam under the advice of the Military Governor on 7th of September, 1949.
By this Firman the earlier order of 24th February, 1949, was revoked and the whole case was referred for opinion and report to Sir George Spence, the Legal Adviser to the Military Governor, who was directed to hear the parties and take such further evidence as he considered necessary.
The enquiry then began before the Legal Adviser but neither party adduced any evidence.
Sir George Spence submitted his report on 7th January, 1950.
The material findings and recommendations in his report were as follows: " 76.
My finding on the case is that neither Mahboob Begum nor Kadiran Begum was married to the Nawab with the result that these ladies and their children are not entitled to participate in the distribution of the matrooka.
77.If this finding is accepted, the order required for its implementation would be an order dismissing the claims of Mahboob Begum and Kadiran Begum on the matrooka and directing Ameerunnissa Begum to pay one lakh of rupees out of the matrooka to Fatima Begum on account of Haq Mahar.
" The Constitution of India came into force on 26th January, 1960.
As Hyderabad was integrated with the Indian Union and the Nizam lost the absolute power which he could exercise previously, it was no longer within his competence to issue a Firman on the terms of the report of Sir George Spence and make it legally binding on the parties.
Recourse was 412 therefore had to legislation and on April 24, 1950, this impugned Act was passed which purported to give a legislative sanction to the findings in the report of Sir George Spence.
The material provision of the Act is contained in section 2, clause (1), which *lays down that " the claims of Mahboob Begum and Kadiran Begum and of their respective children to participate in the distribution of the matrooka of the late Nawab Waliuddowla are hereby dismissed".
The second clause of this section provides that a sum of one lakh of rupees shalt be paid to Fatima Begum on account of her Haq Mahar.
Under section 3, the decisions affirmed in section 2 cannot be called in question in any court of law and finally section 4 provides that the High Court of Hyderabad shall, on the application of any person interested in the decision affirmed in section 2, execute the said decision as if it were a decree passed by itself and such person was a decree holder.
It is this Act which has been pronounced to be invalid by the High Court of Hyderabad to the extent that it dismisses the claims of Mahboob Begum and Kadiran Begum as well as of their children to the personal estate of Nawab Waliuddowla.
It may be conceded that before the coming in of the Constitution, the Nizam of Hyderabad practically enjoyed unfettered sovereign authority and however much the various Firmans, which were issued by him in connection with the present dispute, may appear to be capricious and arbitrary, strictly speaking they were not 'unconstitutional in the sense that they were beyond his competence as the supreme legislature in the State.
After the Constitution came into force and prior to the setting up of a duly constituted legislature in the Hyderabad State, the legislative authority undoubtedly vested in the Nizam as the Rajpramukh of the State under the provision of article 385 of the Constitution read with article 212 A (2) inserted by the President 's (Removal of Difficulties) Order No. II dated 26th January, 1950; but the legislative power exercisable by the Nizam was a strictly limited power.
The Rajpramukh 413 was not only to act in conformity with the provision of article 246 of the Constitution and keep within the bounds of the legislative sphere laid down with reference to the entries in the different legislative lists, but the legislation must not be in conflict with any of the fundamental rights guaranteed under Part&, III of the Constitution.
The impugned Act, as its title and preamble show, was passed with the avowed object of terminating the disputes relating to succession to the estate of the late Nawab Waliuddowala.
Although in the report of Sir George Spence it was held that Mahboob Begum and Kadiran Begum were not the legally wedded wives of the Nawab and their children were not legitimate, there was no express declaration to that effect in the operative portion of the Act which merely lays down that the claims of these two ladies as well as of their children to participate in the distribution of the matrooka of the late Nawab are dismissed.
The legislation may be said to relate to succession and indirectly to marriage also and as such may come within the purview of entry 5, List III of the Seventh Schedule to the Constitution.
It has not been argued by Mr. Somayya, who appeared for the respondents, that a legislation on these topics must be a general legislation; but it has not been disputed by either side that no valid legislation could be passed under these heads which is discriminatory in its character and offends against the equal protection clause embodied in article 14 of the Constitution.
The contention of the learned Attorney General is that the legislation in the present case does not violate the principles of the equality clause and he has attempted to combat with much force the decision of the High Court on this point.
This is the main question in the case which requires to be examined carefully.
The nature and scope of the guarantee that is implied in the equal protection clause of the Constitution have been explained and discussed in more than one decision of this court and do not require repetition.
It is well settled that a legislature which 414 has to deal with diverse problems arising out of an infinite variety of human relations must, of necessity, have the power of making special laws to attain particular objects ; and for that purpose it must have large powers of selection or classification of persons and ,*things upon which such laws are to operate.
Mere differentiation or inequality of treatment does not per so amount to discrimination within the inhibition of the equal protection clause.
To attract the operation of the clause it is necessary to show that the selection or differentiation is unreasonable or arbitrary; that it does not rest on any rational basis having regard to the object which the legislature has in view.
The learned Attorney General in the course of his argument laid considerable stress upon the decision of this court in Chiranjit Lal vs The Union of India(1) and he attempted to call in his aid the two propositions recognised and relied upon in that decision, namely, (1) that the presumption is always in favour of the constitutionality of an enactment, and (2) a law may be constitutional even though it relates to a single individual, family or corporation.
The pro positions themselves may be well founded but whether or not they would apply to a particular case would depend upon the facts and circumstances of that case.
In Chiranjit Lal 's case (1), it is to be noted, the circumstances were somewhat exceptional.
The legislation in that case related to a company which was engaged in production of a commodity vitally essential to the community, and in judging the reasonableness of the classification in such cases the court has undoubtedly to look to the social, political and economic interest of the community as a whole.
In doing so, as Prof Willis observed, the court will assume the existence of any state of facts which can reasonably be conceived of as existing at the time of legislation and capable of sustaining the classification made by it(").
In the case before us what the legislature has done is to single out two groups of persons consisting of two (1) ; , (2) Willis on constitutional Law, p. 580, 415 ladies and their respective children out of those who claim to be related to the late Nawab Waliuddowla and prevent them from getting any share in the personal property of the latter to which they might be entitled under the general law of the land.
They ' claim to be wives and children of the deceased and, as such entitled to have shares in his personal estate, and no competent court of law has as yet negatived their claims in this respect.
On what principle then, it may be asked, was the disability imposed upon these persons alone while the claim of the other claimants was, accepted ? Nay, the legislation goes further than this and denies to these specified individuals a right to enforce their claim in a court of law, in accordance with the personal law that governs the community to which they belong.
They, in fact, have been discriminated against from the rest of the community, in respect of a valuable right which the law secures to them all and the question is, on what basis this apparently hostile and discriminatory legislation can be supported.
It is not suggested that it was for serving a public purpose or securing some advantage to the community as a whole that the legislature chose in this case to interfere with private rights.
The only purpose of the legislation, as appears from the preamble, was to end certain private disputes.
It is true that the quarrel between the two rival parties regarding succession to the estate of the deceased Nawab was going on since, 1938; and after several vicissitudes, for which the Nizam himself or his Legal Advisers were prima rily responsible, there was a report prepared by the Legal Adviser to the State in a particular way, which, contrary to the opinion given by an 'earlier ' Special Commission, negatived the claims of these two ladies and their children.
It is also true that because of the introduction of the Constitution it was no longer possible for the Nizam to issue a Firman embodying this report.
That may be the reason for passing this legislation but it would not furnish any rational basis 54 416 for the discrimination that it made.
The continuance of a dispute even for a long period of time between two sets of rival claimants tot he property of a private person is not a circumstance of such unusual nature as would invest a case with special or exceptional features and make it a class by itself justifying its differentiation from all other cases of succession disputes.
As appears from the preamble to the Act, the only ground for depriving the two ladies and their children of the benefits of the ordinary law is the fact that there was an adverse report against them made by the State Legal Adviser.
This ground is itself arbitrary and unreasonable.
The dispute regarding succession to the estate of the Nawab was a legal dispute pure and simple and without, determination of the points in issue by a properly constituted judicial tribunal a legislation based upon the report of a nonjudicial authority and made applicable to specific individuals, who are deprived thereby of valuable rights which are enjoyed by all other persons occupying the same position as themselves, does, in our opinion, plainly come within the constitutional inhibition of Article 14.
The analogy of private Acts of the British Parliament, to which reference was made by the learned Attorney General in the course of his arguments, is not at all helpful.
The British Parliament enjoys legislative omnipotence and there are no constitutional limitations upon its authority or power.
There were indeed a few statutes passed by the Provincial Legislature in India during British days which regulated succession to the estates of certain princely families.
The Bijni Succession Act (Act.
II of 1931) passed by the 'Assam Legislature is an enactment of this type and it did shut out the rights of certain persons who claimed the Bijni estate under the law of inheritance.
But at that time the Governor General of India had express authority under the provisions of the Government of India Act, 1915, to authorize the Provincial Legislatures to make laws regarding subjects of a private nature.
Quite apart from this, no 417 question of infraction of the equal protection rule could arise in pre Constitution days.
We are not unmindful of the fact that the presumption is in favour of the constitutionality of an enactment ; but when on the ' face of it a piece of legislation is palpably unreasonable and discriminatory and the selection or classification made by it cannot be justified on any conceivable or rational ground, the court has got to invalidate the enactment on the ground of its violating the equal protection clause.
The learned Attorney General contended before us that the High Court was wrong in holding that there was a concluded decree in the present case in favour of respondents 1 to 12 on the basis of the recommendations of the Special Commission, and that this decree was a property within the meaning of law of which these respondents have been deprived by the impugned legislation.
The point is not free from doubt, and much could be said on both sides.
We think, therefore, that it would not be proper on our part to express,any opinion upon it in the present appeal.
We understand that the respondents have filed an execution application in the City Civil Court of Hyderabad which has ordered that execution should proceed and that objections have been taken to this application by the present appellants who have raised inter alia the point that there is no final and effective decree which is capable of execution.
As the point is still pending hearing by the Civil Court of Hyderabad, we do not desire to influence their decision in any way by expressing any opinion on this matter.
We only desire to state that notwithstanding the observations made by the High Court referred to above, the question shall be treated as an open one.
The applicability of article 14 of the Constitution in the present case is, however, not at all dependent upon the fact as to whether or not the respondents have already acquired property in the shape of a decree.
Their claim to the estate of the late Nawab which they wanted to assert under the general law of the land is itself a valuable right, and 418 the deprivation of that right by a piece of discriminatory legislation would be sufficient to bring the case within the purview of article 14 of the Constitution.
Having regard to the view that we have taken, it as unnecessary to consider whether the impugned Legislation violates the provisions of article 31(1) or article 19(1) (f) of the Constitution.
The result is that the appeal is dismissed with costs.
Appeal dismissed.
Agent for respondents Nos.
1 to 12 M. section H. Sastri.
| The continuance of a dispute even for a long period of time between two sets of rival claimants to the property of a private person is not a circumstance of such unusual nature as Would invest a case with special or exceptional features and make it a class by itself justifying its differentiation from all other cases of succession disputes, and the fact that a non judicial authority had made a report against one set of the claimants is not a reasonable ground for depriving them by legislation of their ordinary rights under the law and prohibiting them from having resort to courts of law for establishing their rights.
A nobleman of Hyderabad died in 1936 when it was under the rule of the Nizam, and disputes as to succession arose between his legally married wife and two ladies, Mahboob Begum and Kadiran Begum, who claimed to be his wives.
After protracted proceedings before several non judicial bodies a report adverse to the latter was made in January, 1950, but before the Nizam could issue a firman in accordance with it, Hyderabad became a part of the Indian Union and the Constitution of India came into force.
An enactment called the Waliuddowla Succession Act, 1950, was therefore passed by the Hyderabad Legislature which provided that " the claims of Mahboob Begum and Kadiran Begum and of their respective children to participate in the distribution of the matrooka of the late Nawab are hereby dismissed" and that the above decision "cannot be called in question in any court of law Held, that in singling out two groups of persons consisting of two ladies and their children out of those who claimed to be related to the late Nawab and preventing them from establishing their rights under the personal law which governed the community, in Courts of law, the Act was discriminatory ; that there was no rational or reasonable basis for the discrimination, and the Act contravened the provisions of article 14 of the Constitution and was therefore void.
The analogy of private Acts of the British 405 Parliament is not helpful as the British Parliament enjoys legislative omnipotence and there are no constitutional limitations on its authority or power.
|
l Appeal No. 173 of 1951.
Appeal from the Judgment and Decree dated February 22, 1949, of the High Court of Judicature at Calcutta (Blank and Lahiri JJ.) in Appeal from Original Decree No. 23 of 1944 &rising out of Judgment and Decree dated August 25, 1943, of the Court of the Subordinate Judge, Zilla Midna pore, in Title Suit No. 30 of 1941.
Panchanan Ghose (S.N. Mukharjee, with him) for the appellant.
Sarat Chandra Jana and Bijay Kumar Bhose for respondent No. 1.
Arun Kumar Dutta for respondents Nos. 2 (b) and 15. 278 1952.
December2.
The Judgment of the Court was delivered by MAHAJAN J.
The circumstances under which this ,appeal arises are as follows Touzi No. 2409 of the Midnapore Collectorate consists of several mouzas including mouza Dingol.
The annual land revenue payable in respect of the entire touzi is Rs. 2,892 8 0.
This touzi was distributed into two shares, one being a separate account bearing No. 249/1 and the other being the residuary share.
Both these shares came in course of time to be held by a single person, viz., Jiban Krishna Ghosh and from him they devolved upon his two sons, Sudhir Krishna Ghosh and Sunil Krishna Ghosh, defendants 2 and 3 in the present suit.
Both the two accounts were recorded in their names as joint proprietors.
Under touzi No. 2409 there was a patni which included mouza Dingol.
In the year 1885 Kritibas Hui purchased a share of the said patni.
His father Ramnath Hui purchased some transferable occupancy ryoti lands under the said patni.
These lands are described in schedule " Ka " of the plaint.
Kritibas Hui, while he was a co sharer patnidar, purchased some transferable ryoti lands under the patni described in schedule " Kha " of the plaint.
Kritibas Hui died in the year 1906 or 1907 and his father Ramnath died in the year 1908 or 1909 soon after the death of his son.
On the death of Kritibas Hui, the plaintiff s, four in number, being his sons and nephews, inherited the patni and the other properties left by him.
Subsequently on the death of Ramnath, the plaintiff s while they were co sharer patnidars, inherited the aforesaid transferable occupancy ryoti lands under the patni purchased by Ramnath.
Occupancy ryoti lands in schedule " Ga " of the plaint were purchased by the plaintiffs by different kabalas on different dates, after they had inherited the lands mentioned in schedules " Ka " and " Kha of the plaint.
Similarly the niskar lands mentioned in schedule " Gha " of the plaint were purchased by 279 the plaintiffs after they had taken the inheritance of their father and grandfather.
By the same process they acquired the mokarrari maurashi interest under the Bahali niskar lands of Sree Ishwar Dwar Basuli Thakurani mentioned in schedule "Una" annexed to the plaint.
On the 22nd April, 1938, by a registered kabala the plaintiffs sold their interest in the patni to one Upendranath Pal.
Upendranath Pal thus became the patnidar of the six anna share that was held by the plaintiffs prior to the year 1938.
The rest of the interest in the patni which had been acquired by Satish Chandra Hui, respondent No. 1, was also sold to one Gouranga Sundar Das Gupta along with Upendranath Pal.
The plaintiffs thus ceased to have any interest in the patni and remained in possession of the lands in the status of occupancy ryots or undertenure holders.
When the plaintiffs in the year 1938 sold their patni interest they were heavily indebted to their landlords Sudhir Krishna Ghosh and Sunil Krishna Ghosh for arrears of patni rent.
On the 25th March 1939, the landlords filed a suit claiming a sum of Rs. 16,835 3 6 as arrears of rent due to them from April, 1935, to March, 1939, in the court of the subordinate judge of Midnapore against the recorded patnidars (viz., the plaintiffs) without recognizing the transfer made by them.
While this suit was pending, the landlords failed to pay the March kist of the revenue and cesses of the touzi in both the accounts, with the result that both the undivided half shares of the touzi represented by separate account No. 1 and by residuary account were advertised for sale on 24th June, 1939, under section 6 of the Bengal Land Revenue Sales Act (XI of 1859).
The notice advertising the sale is exhibit H.
It notified sale of the shares in the estate as such and did not state that the entire estate would be sold.
In column of the notification the arrears due from the two shares were entered separately.
Both these shares were actually sold on the issue of a single notice and at a 280 single sale and were purchased by defendent 15 the appellant before us.
The sale certificate shows that what was certified to have been purchased by the appellant was the separate account share as also the residuary share making up between them the totality of the touzi.
On the 9th January, 1940, defendant 15 (the appellant) in exercise of the rights conferred by section 37 of the Revenue Sales Act as purchaser of an entire estate in the revenue sale served a notice on the maha expressing his unequivocal intention to annul and avoid all under tenures including patnis and darpatnis.
On the same date he is alleged to have taker possession of some plots of land in possession on under tenure holders, encumbrance holders and niskardars.
The revenue sale held on 24th June, 1939, has lead to a crop of litigations.
As already stated, the land lords had sued for the recovery of the arrears of rent due from the patnidars, viz., the plaintiffs, before the sale took place.
That suit was decreed on the 14th May, 1940.
An application was made for execution of the decree on 21st June, 1940, by attachment and sale of certain plots in possession of the judgment debtors On behalf of the judgment creditors it was contended that the entire touzi having been sold under the revenue sale, the purchaser had become entitled to annul the tenure under section 37 of the Revenu Sales Act and as a matter of fact had annulled the same and consequently the tenure itself having expired, section 168 A of the Bengal Tenancy Act did not apply and the decree was executable against other properties of the judgment debtors.
This con tention was upheld by the subordinate judge but was negatived in appeal by the High Court, and it was held that the revenue sale was a sale of the shares on the touzi under section 13 of the Revenue Sales A and the purchaser did not acquire any right to and the tenures, he not being a purchaser of the entire estate as such and therefore the patni being in existence, the decree holder could not execute the decre 281 for arrears of rent of the patni against other properties of the judgment debtors.
(Vide Satish Chandra Hui vs Sudhir Krishna Ghosh (1), decided in February, 1942, during the pendency of the present suit).
The appellant was not a party to those proceedings.
For the second time the question whether at the same revenue sale defendant 15 purchased the entire estate or two separate shares only arose in a case wherein he was impleaded as a party.
Bimal Kumar Hui and another brought a suit some time in the year 1941 for establishment of their rent free title in certain lands and for confirmation of their possession.
The present appellant was impleaded as defendant 2 in the suit as purchaser of the touzi and as claiming to have annulled the plaintiffs ' interest.
Defendant 2 pleaded that an entire touzi had been purchased by him at the revenue sale and he had thereafter annulled the interest held by the plaintiffs and they were disentitled to relief as they had no subsisting interest in the plots of land claimed by them.
, This plea was negatived up to the High Court and the plaintiffs ' suit was decreed.
(Vide ' Gunendranath Mitra vs Bimal Kumar Hui (2) decided in September, 1948).
Harries C. J. and Chakravarti J. in a very well considered and reasoned judgment reached the conclusion that the revenue sale in favour of the appellant was a sale of two separate shares under the provisions of section 13 of Act XI of 1859 and not of the entire estate and that he had not acquired the.
right to annul the encumbrances under section 37 of the Revenue Sales Act.
The third occasion on which the effect of the revenue sale held on 24th June, 1939, came up for consideration by the High Court arose in the suit which has given rise to the present appeal.
On the 28th June, 1941, the plaintiff respondents, Satish Chandra Hui and others, instituted title suit No. 30 of 1941 for a declaration of title and confirmation of possession of certain plots of land in the court of (1) (2) 282 the subordinate judge of Midnapore.
There was the usual preliminary skirmish between the parties antecedent to the suit, resulting in proceedings under section 144, Criminal Procedure Code.
Possession of the paddy crop growing on a number of plots was taken by the District Magistrate and eventually under the orders of the High Court the crop was handed over to defendant 1, an employee of the appellant.
In this suit the present appellant was impleaded as defendant 15.
In the plaint it was averred that the plaintiffs were in possession of the plots of land mentioned in schedules " Ka", " Kha" and " Ga " of the plaint as occupancy tenants, that in respect of the lands mentioned in schedules " Gha " and " Una they had niskar rights and that as in the revenue sale the appellant did not purchase the entire estate he was not entitled to annul the patni and the other tenures or the rent free grants; and that the plaintiffs having transferred the patni rights to Upendranath ,Pal which still subsisted, none of the encumbrances could be said to have been extinguished.
The appellant pleaded that he was the purchaser of the entire touzi at the revenue sale held on 24th June, 1939, and had acquired the power to avoid and annual the encumbrances and that by a notice duly published on the 9th January, 1940, he had annulled all under tenures including the patni and that the transfer of the patni to Upendranath Pal was a benami transaction and that even if it was held genuine the plaintiffs ' rights in the ryoti land had been extinguished as the ryoti rights had merged with the patni rights under section 22 of the Bengal Tenancy Act as it was in force before its amendment in 1928 and that by a sale of the patni to Upendranath Pal.
the plaintiffs ' rights in those lands stood transferred to him and they were not entitled to maintain any suit in respect of those plots.
The trial judge decreed the suit in respect of some of the plots detailed at page 144 of the paper, book.
The plaintiffs ' claim in respect of other lands mentioned in schedule " Gg " of the plaint was dismissed.
283 Plaintiffs were also given a decree for Rs. 416 4 0 against defendant 1 on account of the paddy of 55 1/2 bighas of the land out of schedules.
"Ka ", " Kha " and " Ga ", to which they had proved their title and of which they were entitled to recover khas possession.
It was held that at the revenue sale the entire touzi did not pass to the appellant and he had acquired no right to annul or avoid the under tenures and encumbrances, that the ryoti holdings of the plaintiffs had merged in the patni and had passed to, Upendranath Pal on the sale of the patni to him on 22nd April, 1938, but that Upendranath Pal had resettled these lands with the plaintiffs and they being settled the ryots of the village had acquired occupancy rights in these plots.
The plots of land described in schedule Ga " were held as not assessed to revenue and that being so, defendant 15 was held not entitled to possession of these niskar lands.
Defendant 15 preferred an appeal to the High Court against the judgment of the subordinate judge, while the plaintiffs preferred cross objections.
The appeal and the cross objections were both dismissed by the High Court and the findings of the trial judge were maintained.
It was contended before the High Court that the revenue sale, though held in fact under section 13 of Act XI of 1859, should be deemed to have been held under section 3 and that the appellant had acquired all the rights of the purchaser of an entire estate.
The High Court negatived this con tention and observed that on a plain reading of section 13 the contention could not be sustained, the essential conditions for the exercise of jurisdiction under section 13 being the existence of a separate account or accounts, and the liability of the entire estate for sale for revenue arrears and that both these conditions having been fulfilled in this case, the Collector rightly proceeded under section 13 to sell the shares and that the additional provisions mentioned in the second paragraph of the section need only be complied with in cases where there does exist a share from which no arrear is due it was further 37 37 284 hold that though the old occupancy rights of the plaintiffs merged in the patni and passed to Upendranath Pal after the sale of the patni to him, the action of Upendranath Pal in realizing the rent from the plaintiffs amounted to a resettlement and that by his action he had conferred a right of tenancy upon the plaintiffs who being settled ryots of the village acquired a right of occupancy in all the lands in respect of which rents were realized. ' This decision was announced by the High Court on the 22nd February, ' 1948, and is in appeal before us on a certificate granted by the High Court on 25th August, 1960.
For the fourth time the same question came up for consideration before the High Court after the decision under appeal and the view expressed in its earlier judgments by the High Court was followed.
[Vide Gowranga Sundar vs Rakhal Majhi (1).] Mr. Ghosh for the appellant argued two points before us : (1) that defendant 1 5 being the purchaser of an entire estate at a revenue sale had all the rights conferred upon him by section 37 of the Bengal Land.
Revenue Sales Act, and all under tenures stood annulled and plaintiffs had no rights in the lands in suit in which they had no occupancy rights, and (2) that the plaintiffs were not entitled to a decree on the basis of the resettlement of land, which case was never made out by them, and which was inconsistent with the pleadings and evidence and that on the facts proved there could not be any legal inference of resettlement.
In our opinion, neither of these contentions is well founded.
Section 6 of Act XI of 1859 authorizes the Collector after the latest day of payment fixed in the manner prescribed in section 3 of the Act has expired, to issue a notification specifying the estates or shares of estates which have to be sold for recovery of arrears of revenue, and further authorizes him to put up to public auction on the date notified for sale, the estates or (1) 285 shares of estates so specified.
The contents of the notifi cation issued for the sale in question in unambiguous terms indicate that two separate units of the estate from which separate items of arrears ' were due were notified for sale.
No entry was made in the notification in the column meant to be filled in when the entire estate is to be put up for sale.
In the face of these facts it was conceded by Mr. Ghosh that the sale in fact took place as provided for in section 13 of Act XI of 1859 and what was actually put up for sale were two separate shares in the estate which made up the totality of the estate.
The learned counsel, however, contended that the sale should be deemed to have been of an entire estate, as both the shares sold con stituted the totality of the estate and because section 13 could have had no application to a case wherein both the accounts were in default, the section having application only in cases where there at least exists a share that is not in default and which needs protection against the default of the, other co sharers.
This argument, though attractive, is fallacious.
To hold that a sale, which in fact was of two different accounts, is to be deemed to be a sale of the entire estate would be tantamount to converting a fact into a fiction by a judicial verdict.
The notification under section 6 issued by the Collector must, in our opinion, be considered as conclusive on the point as to what the subject matter of the sale was, i.e., whether what was sold was the entire estate or two shares.
The appellant is really on the horns of a dilemma.
If the contention of his learned counsel that the sale by the Collector of shares of the estate was not authorized by section 13 is taken seriously, the sale would then be a nullity as under none of the provisions in the Revenue Sales Act such a sale could be held in the manner adopted and the appellant would have no title under it whatsoever; if such a sale is authorized by section 13 of the Act, then it gives him no rights to annul the undertenures.
In either event, be cannot resist the plaintiffs ' suit.
In our judgment, it has been rightly held 286 in the courts below that the appellant at this revenue sale did not become the purchaser of the entire touzi as such and did not become entitled to the privileges conferred on such a purchaser by the provisions of section 37 of Act XI of 1859.
The contention of Mr. Ghosh that the provisions of section 13 are not attracted to a case where all the shares in an estate are in default and that in that event the only authority that the Collector has is to put up for auction the entire estate is again, in our opinion, not well founded.
Before the Revenue Sales Act was passed in 1869 estates were being put up for sale for arrears irrespective of the question whether the majority of the cosharers had deposited their shares of the revenue or whether the amount due was large or small.
The cosharers who had paid their shares within the due date were affected seriously by such sales.
Provision was therefore made in 1859 for affording protection to the cosharers who were willing to pay and had ' paid their share of the revenue.
On the application of the parties the Collector began to keep a record of separate accounts in the names of the different cosharers.
The liability of the entire estate for the total amount of revenue was not in any way affected by this arrangement. 'The only privilege given was that if the cosharers had got separate accounts opened in the collectorate the revenue apportioned for the particular cosharers would be receivable by the Collector.
At the initial stage the shares belonging to such of the cosharers who duly paid the amount allotted in their share would not be put up to sale even if there be a default on the part of one or more of the other cosharers.
Only the defaulting separate accounts would be put up to sale in the first instance.
If the Collector found that the total amount of the revenue in arrears was not realizable from such sale, he would thereupon stop the sale of the defaulting share and give notice that the entire estate would be put up to sale.
The paramount consideration governing the whole of this Act is to preserve intact the 287 ultimate security of government for the revenue demand against the estate.
By permitting the opening of separate accounts the Act seeks to give recorded sharers of a joint estate an easy means of protecting their shares from sale for the default of their cosharers, but there is no ultimate protection if the government demand is still unsatisfied.
Even in cases where all the shares are in default, this protection cannot be denied because the amount of arrears due from them may be different sums of money.
Sections 13 and 14 of the Act on which the argument rests are in these terms: 13.
" Whenever the Collector shall have ordered a separate account or accounts to be kept for one or more shares if the estate shall become liable 'to sale, for arrears of revenue, the Collector or other officer as aforesaid in the first place shall put up, to sale only, that share or those shares of the estate from which,, according to the separate accounts, an arrear of revenue may be due.
In all such cases notice of the intention of excluding the share or shares from which no arrear is due shall be given in the advertisement of sale prescribed in section 6 of this Act.
The share or shares sold, together with the share or shares excluded from the sale, shall continue to constitute one integral estate, the share or shares sold being charged with the separate portion, or the aggregate of the several separate portions, of jama assigned thereto.
If in any case of a sale held according to the provisions of the last preceding section the highest offer for the share exposed to sale shall not equal the amount of arrear due thereupon to the date of sale, the collector or other officer as aforesaid shall stop the sale, and shall declare that the entire estate will be put up to sale for arrears of revenue at a future date,unless the other recorded sharer or sharers or one or more of them, shall within ten days purchase the share in arrear by paying to the Provincial Government the whole arrear due from such share.
288 If such purchase be completed, the Collector or other officer as aforesaid shall give such certificate and delivery of possession as are provided or in sections 28 and 29 of this Act to the purchaser or purchasers, who shall have the same rights as if the share bad been purchased by him or them at the sale.
If no such purchase be made within ten days.
as aforesaid I the entire estate shall be sold, after notification for such period and publication in such manner as is prescribed in section 6 of this Act.
" The concluding words of section 14 furnish a key to the construction of these sections.
When a contingency arises in a case, where two separate accounts have been kept, to sell an entire estate, a fresh notification has to issue in accordance with the provisions of section 6 of the Act notifying that the entire estate is for sale.
In the absence of such a notification a sale of an entire estate is not authorised in such a case.
Section 13 thus empowers the Collector where separate accounts are kept, to sell the shares in default as such, there being no scope for the operation of paragraph 2 of the section where all the shar ers ' are in default.
There is nothing in that section which disentitles the Collector where two separate accounts have been kept and both of them are in default, to notify for sale the separate accounts for recovery of arrears due from each of them separately, or to bring several defaulting shares to sale all at once without following the procedure laid down in section 13.
If the Collector proposes to sell the entire estate, where there are several accounts, the first step he has to take is to close the separate account or accounts or merge them into one demand and the next step would be to issue a notification for sale of the entire estate under section 6 and it is only when the Collector has followed this procedure that he would have authority to bring to sale the entire estate and not otherwise .
In this case no such thing was done.
The demands against the two shares were not merged into one item and the entire estate could not 280 be sold for two separate demands.
It could only be notified for sale for recovery of a single sum of arrears due from the entire estate.
In our judgment, therefore, it is not right to hold as was contended by Mr. Ghosh that a sale for arrears of revenue is not a sale under section 13 unless there is a share from which no arrear is due and unless a notice of the intention of excluding that share is given in the advertisement of sale under section 6 of the Act that that share is excluded from sale.
The second point of Mr. Ghosh that no inference should have been drawn in this case that the lands in suit were resettled by the purchaser of the patni on the plaintiffs is also without force.
The facts from which an inference of resettlement has been drawn by the courts below were alleged in the plaint and on those facts such an inference could be justifiably raised.
The plaintiffs had been paying rent to the purchaser of the patni on the land in their possession and this was accepted by the purchaser as if they were his tenants.
In those circumstances the absence of a 'specific pleading as to resettlement could not in any way be said to prejudice defendant 15 's case.
Upendranath Pal having treated the plaintiffs as tenants, defendant 15 has no right to question their interest and it must 'be held that their claim was rightly decreed in the courts below to the extent that they were able to establish it.
The appeal before us was limited to the plots of land which were not covered by the sanads or regarding which plaintiffs hid not been able to prove that they were occupancy tenants.
In view of our findings, however, the appeal even as regards those plots has no merits.
For the reasons given above the appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for respondents Nos. 1, 2 (b) & 15; section C.Bannerjee.
| Under the Bengal Land Revenue Sales Act (XI of 1859) if this Collector proposes to sell the entire estate where there art separate accounts for the several shares which constitute the estate, he has first to close the separate account or accounts or merge them into one demand and then he has to issue a notification for the sale of the entire estate under section 6 of the Act and it is only when the Collector has followed this procedure that he would have authority to bring to sale the entire estate.
Where a touzi was held in two shares in respect of which separate accounts were kept in the Collector 's records and, as the shares were in arrears a notification was issued putting up for sale the two separate units of the estate and showing the separate items of arrears due from each unit, and both the shares were sold: Held, that the sale cannot be treated as a sale of the entire estate even though the two shares constituted the whole estate, and the purchaser was not entitled to the privileges conferred on the purchaser of an entire estate by section 37 of the Bengal Land Revenue Sales Act, 1859.
The notification issued under section 6 of the Act was conclusive as to whether the subject matter of the sale was the entire estate or the separate shares constituting the estate.
|
vil Appeal No. 139 of 1951.
Appeal from the Judgment and Decree dated February 10, 1960, of the High Court of I Judicature at Calcutta (Harries C.J. and Sarkar J.) in Appeal from Original Order No. 95 of 1945, arising out of Judgment and, Order dated January 30, 1945, of the Court of Subordinate Judge at Asansol of Zilla Burdwan in Miscellaneous Case No. 70 of 1941.
N. C. Chatterjee '(B. C. Boy and A. E. Mukherjea, with him) for the appellant.
Dr. N. C. Sen Gupta (B. L. Pal, with him) for res pondent No. I. 379 1962.
December 9.
Das J. and Ghulam Hassan J. delivered separate judgments.
The judgment of Mahajan J. and Vivian Bose J. was delivered by MAHAJAN J. MAHAJAN J.
In our opinions the decision can be rested on either of the ground, which have been raised by our brothers Das and Ghulam Hasan respectively.
We would therefore allow the appeal on both the grounds.
DAS J. I have had the privilege of perusing the judgment delivered by my learned brother Hasan and I agree with his conclusion that this appeal should be allowed.
I would, however, prefer to rest my decision on a ground different from that which has commended itself to my learned brother and as to which I do not wish to express any opinion on this occasion.
The relevant facts material for the purpose of disposing of this appeal have been very clearly and fully set forth in the judgment of Hasan J. and I need not set them out in detail here.
Suffice it to say that on June 12, 1931, the High Court, Original Side, which is the Court which had passed the decree, transmitted the same for execution to the Asansol Court through the District Judge of Burdwan and that the Asansol Court thereupon acquired jurisdiction to execute the decree against properties situate within its territorial limits.
The application for execution made by the decree holder which was numbered 296 of 1931 was, however, on February 27, 1932,dismissed for default and on March 11, 1932, the Asansol Court sent to the High Court what in form purported to be a certificate under section 41 of the Code.
There is no dispute, however, that the Asansol Court did not return to the High Court the certified copy ' of the decree and other documents which had been previously transmitted by the High Court The decree holder on November24, 1932 filed in the Asansol Court another petition for 380 execution of the decree against the same judgment debtors with the same prayer for the realisation of the decretal amount by sale of the same properties as mentioned in the previous execution case.
The application 'was registered as Execution Case No. 224 of 1932.
The judgment debtors ' contention is that the certificate sent by the Asansol Court to the High Court on March 11, 1932, was and was intended to be in form as well as in substance a certificate under section 41 of the Code, and that thereafter the Asansol Court ceased to have jurisdiction as the executing Court and that as there was no fresh transmission of the decree by the High Court the Asansol court could not entertain Execution Case No. 224 of 1932 and consequently all subsequent proceedings in the Asansol Court were void and inoperative for lack of inherent jurisdiction in that Court.
This contention was rejected by the Subordinate Judge of, the Asansol Court in his judgment delivered on January 30, 1945, in Miscellaneous Case No. 70 of 1941 but found favour with the High Court in its judgment delivered on February 10, 1950, which is now under appeal before us.
It appears that on.
March 17,1933, the decreeholder took out a Master 's summons in the Original Side of the High Court being the Court which passed the decree in Suit No. 1518 of 1923 praying, interalia, that the Official Receiver be discharged from further acting as Receiver in execution, that leave be given to the Asansol Court to sell the colliery in execution of the decree dated June 25, 1923, and the order dated February 7, 1924, and that leave be given to the plaintiff to bid for and purchase the Sripur colliery.
This summons was supported by an affidavit affirmed by one Pramatha Nath Roy Chowdhury, an assistant in the employ of the plaintiff.
This affidavit refers to the consent decree of January 25, 1923, passed in the said suit and the additional terms of settlement embodied in the order of February 7, 1924, the payments made by the judgment debtors from time to time amounting to 381 Rs. 30,437 8 0 besides a sum of Rs. 3,500 which bad been paid on account of settled costs and states that, the balance of the decretal amount was still due and that there had been no other adjustment of the decree.
It refers to a previous application by tabular statement for execution of the decree by the appointment of a Receiver and by the sale of the Sripur colliery which was charged under the order of February 7, 1924, and to the order made by the High ' Court on that tabular statement on June 21, 1926, appointing the Official Receiver of the High Court as Receiver of the Sripur colliery.
The affidavit then recites that the Official Receiver who had been given liberty to sell the colliery on certain terms took steps to put up the same to sale but had been prevented from actually doing so by reason of an injunction obtained by one of the judgment debtors Benoy Krishna Mukherjee in Suit No. 843 of 1928 filed by him.
The affidavit further refers to the fact that the said Suit No. 843 of 1928 had since then been dismissed and that no appeal had been preferred against that decree of dismissal and that no order had been made for stay of execution of the said decree.
Paragraph 13 of the affidavit then states as follows : " that the plaintiff was advised that charge should be enforced and Sripur colliery should be sold in execution of the said order by the Asansol Court in the local jurisdiction of which the colliery is situate and the plaintiff accordingly by an order made on the 15th of April, 1931, obtained leave of the Court to execute the decree against Basantidas Chatterjee, Srimantodas Chatterjee and Bholanath Chatterjee as sons, heirs and legal representatives of the deceased Prankristo Chatterjee and the other defendants judgment debtors and caused the certified copies of the decree dated 25th June, 1923, and the order dated 7th February, 1924, to be transmitted to the District Judge at Burdwan who in his turn sent the decree to the Subordinate Judge of Asansol to execute the decree.
Such execution proceedings are 382 now pending before the Asansol Subordinate Judge 's Court being Execution Proceedings No.224 of 1932.
" In the circumstances the plaintiffs asked for directions on the lines mentioned in the summons.
The summons was duly served on all the judgment debtors as mentioned in the affidavit of service filed in Court and referred to in the order made by the Court on the Master 's summons on March 27, 1933.
The operative part of the said order of the High Court was as follows: " It is ordered that Official Receiver of this Court who was appointed the Receiver in this suit of the Sripur colliery pursuant to the said order dated the 21st day of June, 1926, be and he is hereby discharged from further acting as such Receiver as aforesaid: And it is further ordered that the said Receiver do pass his final accounts before one of the Judges of this Court and it is further ordered that the Subordinate Judge of Asansol be at liberty in execution of the said decree and order dated the 7th day of February, 1924, to sell either by public auction or by private treaty to the best purchaser or purchasers that can be got for the same provided the said Subordinate Judge shall consider that a sufficient sum has been offered the Sripur colliery aforesaid charged under the said order dated the 7th day of February, 1924 And it is further ordered that the plaintiff be at liberty to bid for and purchase the said colliery at the said sale and if declared the purchaser to set off the amount of the purchase money pro tanto against the balance of his claim under the said decree: And it is further ordered that the plaintiff be also at liberty to add his costs of and incidental to this application to be taxed by the Taxing Officer of this Court to his claim under the said decree.
" The order sheet of Execution Case No. 224 of 1932 has not been printed in extenso but there can be no doubt that this order of the High Court was communicated to the Asansol Court, for it was after this order 383 that the Asansol Court proceeded with the execution 2case and sripur colliery was sold for the first time on June 9, 1933, and the decree holder purchased the same for Rs. 20,000.
This sale of course was eventually set aside, but this order made by the High Court on the Original Side being the Court which passed the decree in Suit No. 1518 of 1923 appears to me to involve and imply, and may well be regarded as in substance amounting to, an order for transmission of the decree to the Asansol Court for execution under section 39 of the Code of Civil Procedure.
The Civil Procedure Code does not prescribe arty particular form for an application for transmission of a decree under section 39.
Under sub section (2) of that section the Court can even suo motu send the decree for ,execution to another Court.
It is true that Order XXI, rule 6, provides that the Court sending a decree for execution shall send a copy of the decree, a% certifi cate setting forth that satisfaction of the decree hid not been obtained by execution within the jurisdiction of the Court and a copy of the order for the execution of the decree but there is authority to the effect that an omission to send a copy of the decree or an omission to transmit to the ' Court executing the decree the certificate referred to in clause (b) does not prevent the decree holder from applying for execution to the Court to which the decree has been transmitted.
Such omission does not amount to a material irregularity within the meaning of Order XXI, rule 90, and as such cannot be made a ground for setting aside a sale in execution.
Further, the fact remains that the certified copy of the decree and the certificate of non satisfaction which had been sent by the High Court 2to the Asansol Court on April 15, 1931, through the District Judge of Burdwan who forwarded the same to the Subordinate Judge at Asansol were still lying on the records of that Court and the sending of another certified copy of the decree and a fresh certificate of non satisfaction by the High Court would have been nothing more than a formality.
In the circumstances, the omission to send those documents 384 over again to the Asansol Court was a mere irregularity which did not affect the question of jurisdiction of the executing Court.
In my opinion, after the order made by the High Court on March 27, 1933, had been communicated to the Asansol Court the Asansol.
Court became fully seized of jurisdiction as the executing Court and none of the proceedings had thereafter in that Court can be questioned for lack of inherent jurisdiction.
I would, therefore, on this ground alone accept this appeal and concur in the order proposed by my learned brother.
GHULAM HASAN J.
This case is illustrative of the difficulties which a decree holder has to encounter in recovering the money in execution after he has obtained the decree of court.
It is one of those cases, by no means rare, in which the execution proceedings in the courts below have dragged on to inordinate lengths and led to consequent waste of public time and expense to the parties.
The decree in the present case was passed upon a compromise in Suit No. 1518 of 1923 on the original :side of the Calcutta High Court as long ago as June 25, 1923, in favour of one Nagarmull Rajghoria against Pran Krishna Chatterjee and 5 others, hereinafter referred to as the Chatterjees.
The decree was for a sum of Rs. 75,000 with interest at twelve per cent.
per annum with quarterly rests.
The Chatterjees hypothecated their Kbradauga colliery as security for the payment of the decretal amount.
Subsequent to this decree the Chatterjees entered into an agreement ,With one Benoy Krishna Mukherjee hereinafter referred to as Mukherjee on January 24, 1924, appointing the latter as Managing Agent of the aforesaid colliery whereby he became entitled to receive royalty of another colliery called Sripur colliery.
The decree was adjusted on March 18, 1924, by making Mukherjee liable as surety and by the Chatterjees charging their Sripur colliery as additional security.
The hypothecated properties were situate at Asansol and 50 385 Nagarmull obtained an order from the High Court for permission to execute the decree at Asansol with the direction that a certified copy of the decree, a copy of the order of transmission and a certificate of partial satisfaction of the decree should be transferred to the court of the Subordinate Judge at Asansol. ' This order was passed on April 15, 1931, and the three documents aforementioned were sent to the transferee court at Asansol through the District Judge, Burdwan on June 12, 1931.
(Order XXI, rule 6, Civil Procedure code.) On August 20, 1931, Nagarmull filed his first appli cation for execution of the decree by sale of Sripur colliery.
The execution case is numbered as 296 of 1931.
Notices under Order XXI, rule 22, rule 64 and rule 66, of the Civil Procedure Code were issued and served on various dates.
The case was fixed for February 16, '1932.
On this date Nagarmull applied for time to prove service of the notices and the case was adjourned to February 23 1932.
He again applied for time on that date and the case was adjourned to February 27, 1932.
On this latter date Nagarmull was again not ready and asked for more time.
But this was refused, and the execution case was dismissed for default without any amount being realized under the decree.
The transferee court sent to the High Court what purported to be a certificate under section 41 of the Civil Procedure Code, stating that the execution case was dismissed for default on February 27, 1932.
Neither the copy of the decree, nor any covering letter as required by the rules of the High Court was sent along with the certificate.
The certificate was received by the High Court on March 11, 1932.
It appears that the decree holder filed a second application for execution of the decree on November 24, 1932, by sale of the Sripur colliery.
This case was numbered as Execution Case 224 of 1932.
Notices under Order XXI, rule 22 and rule 66, 'of the Civil Procedure Code were duly served and the executing court ordered the issue of a sale proclamation fixing April 8, 1933, as the date of the sale, It 386 appears that the decree holder received only partial satisfaction of the decree out of the sale proceeds of Koradanga colliery which had been sold at the instance of the superior landlords and by certain cash payments.
He applied for execution of the decree by appointment of a Receiver and by sale of the Sripur colliery.
The Receiver was appointed on June 21, 1926, and he was directed to sell the Sripur colliery to the highest bidder permitting the decree holder at the same time to bid for and purchase the property, but he was restrained from proceeding with the sale by an order of court passed in a certain suit filed by Mukherjeo against the decree holder.
This suit was dismissed by the High Court.
Accordingly the.
decree holder applied on March 17, 1933, to the High Court praying that the Receiver be discharged and leave be given to the executing court to sell the Sripur colliery in execution of the decree of June 25, 1923, in which Execution Proceedings No. 224 of 1 932 were pending at the time.
He also asked: that leave be given to him to bid for and to, purchase the property.
Notices of this application were duly served on the parties and on March 27, 1933, the High Court granted all the , prayers (Exhibit F. 5).
The property was sold on the 9th of June, 1933, and was purchased by the decree holder for Rs. 20,000.
Mukherjee, however, filed an application on July 7, 1933, under section 47 and Order XXI, rule 90, of the Civil Procedure Code for setting aside the sale.
The application was numbered as Miscellaneous ,Case No. 63 of 1933.
The Chatterjees also started two Miscellaneous Cases Nos. 64 and 55 of 1933 on July 8, 1933.
During the pendency of the three miscellaneous cases, the appellant Mohanlal Goenka purchased the decree on January 10, 1934.
Miscellaneous Case No. 53 of 1933 was allowed and the sale was set aside on January 29, 1934, and Cases Nos. 54 and 55 of 1933 were dismissed for default.
The result of these miscellaneous cases was communicated to the High Court in a document which purports to be a certificate under section 41 of the 387 Civil Procedure Code and wag received on February 1, 1934.
Two appeals were preferred by the decreeholder on April 18, 1934, but the order setting aside the gale was confirmed and resale of the Sripur properties was ordered by the High Court.
The properties were again sold on April 22, 1936, and were purchased by the decree holder for Rs. 12,000.
Mukherjee filed an appeal in the High Court and during the pendency of the appeal he filed an application under section 47 and Order XXI, rule 90 of the Civil Procedure Code for setting aside the sale.
The appeal was disposed of by consent of parties and it was agreed that the application under Order XXI, rule 90, be heard by the executing court.
Accordingly the application was heard and the sale set aside.
Mukherjee then applied under section 47 on April 4, 1938, stating that Mohanlal Goenka could not continue the proceedings started by Nagarmull, but the application was dismissed and May 22, 1938, was fixed for the sale of the property,.
He filed an appeal in the High Court which was dismissed under Order XLI, rule II, of the Civil Procedure Code.
The property was sold for the third time and was purchased by the decree holder for Rs. 2,60,000 on May 27, 1938.
Mukherjee applied under section 47 and Order XXI, rule 90, of the Civil Procedure Code for setting aside this sale on June 27, 1938 : (E 4) (Miscellaneous Case No. ' 76 of 1938).
The application was dismissed on June 30, 1938, and the sale was confirmed.
Execution Case No. 224 of 1932 was dismissed for part satisfaction.
The executing court on July 9, 1938, sent to the High Court a certificate under section 41 of the Civil Procedure Code, accompanied with the covering letter communicating the result of the execution case.
This was received by the High Court on July 12, 1938.
Mukherjee carried the matter in appeal to the High Court but the appeal was dismissed on August 5, 1940: (Exhibit F).
Mukherjee filed an application for review under Order XLVII, rule 1, of the Civil Procedure Code against.
the aforesaid order on November 25, 1940, 388 (Exhibit B).
He also.
filed on November 28, 1940,7 an application for leave to appeal to the Privy Council (Exhibit A).
The review application was dismissed on May 8,1941, and leave was refused on June 16, 1941.
On May 12, 1941, Mukherjee filed an application under sections 47 and 151 of the Civil Procedure Code (Miscellaneous Case No. 70 of 1941) and it is this application which has given rise to the present appeal before us.
The application was supported by an affidavit filed on may 26, 1941.
The present appellant filed an objection on July 5, 1941, to the, application.
The application was dismissed by the Subordinate Judge on January 30, 1945 but the order was set aside on appeal by the High Court on February 10, 1950.
Leave to appeal to this Court was granted by the ' High Court on July 28, 1950.
The case put forward by Mukherjee before the Subordinate Judge was that after the dismissal of Execution: Case No. 296 of 1931 on Februarv 27. 1932, and the sending of a certificate under section 41 to the High Court, the decree was never again transferred to the Asansol court for execution.
According to him, the decree holder fraudulently detached the certificate of non satisfaction from the Execution Case No. 296 of 1931 and attached it to the second Execution Case No. 224 of 1932, inducing the court to believe that the certificate had been obtained from the High Court for taking fresh proceedings in execution, Mukherjee had instituted Title Suit No. ' 3 of 1936 to recover some money and to enforce a charge against the Sripur colliery and for, permission to redeem the charge declared in favour of the decree holder if it was prior to his own claim ' The suit was dismissed but on appeal the High Court, allowed him to redeem the charge in favour of the decree holder.
In order to ascertain the amount of the charge Mukherjee instructed his attorney to search the record of Suit No. 1518 of of 1923 and he came to know for the first time on August 23, 1940, that after the dismissal of 'the first 389 application & certifioate under section 41 of the Civil Procedure Code had been sent by the Asansol Court to the High Court and the, latter never retransferred the decree for execution.
Accordingly his case was that the Asansol Court had no jurisdiction to entertain Execution Case No. 224 of 1932, and all, the proceedings in connection therewith were null and void.
, He therefore urged that the auction sale should be set aside.
The present appellant denied the allegations of the judgment debtor.
He pleaded that no certificate under section 41 of the Civil Procedure Code was sent to the High Court in Execution Case No. 296 of 1931 and the execution court retained jurisdiction throughout, that the High Court had authorised the sale of the property in execution of the decree and that no fresh certificate of non satisfaction was required to give jurisdiction to the Asansol Court to proceed with Execution Case No. 224 of 1932.
The judgment debtor was aware that the copy of the decree and the certificate of non satisfaotion were not sent to the High Court and he could not possibly have laboured under a wrong impression that a fresh certificate had been ,sent by the High Court for taking execution prooeedings and that the decree holder practised no fraud upon him.
He also pleaded that the application was barred, by limitation, that it was barred by the principle of res judicata as the objection now raised had previously been made and either not pressed, or rejected and that the judgment debtor was fully aware of all the proceedings that had taken place in connection with the decree.
The Subordinate Judge framed the following three main issues in the case: 1.
Is this Miscellaneous Case maintainable under section 151 of the Civil Procedure Code? 2.Did this court act in accordance with section 41, Civil Procedure Code ? If so, was the decree retransmitted to this court for fresh execution in 1932 ? If not, had this court jurisdiction to execute the decree again in 1932 ? 390 3.
Is this Miscellaneous Case barred according to the principle of res judicata ? Upon the first point the learned Subordinate Judge held that the executing court did not lose jurisdiction to execute the decree, that the allegation about the detaching of certificate of non satisfaction from the records in the custody of the court and its surreptitious insertion in Execution Case No. 224 of 1932 constitute grounds for a suit, and a fresh application under section 151 of the Civil Procedure Code, was not maintainable.
Upon the second point the court held that having regard to the circumstances of the case, no certificate of non satisfaction of the decree as required by section 41 was sent by the executing court to the High Court, that no re transmission of the decree by the High Court was required to start Execution Case No. 224 of 1932 and that the executing court retained seisin of the execution and, could execute the same without a further direction from the High Court.
Upon the third point, the learned Subordinate Judge held that Mukherjee had alleged in para.
15 of his petition in Miscellaneous Case No. 53 of 1933 that the decree and the certificate were not sent by the High Court for starting the execution case afresh, but this objection to jurisdiction was not pressed at the time of the hearing.
Again in para.
20 of his petition in Miscellaneous; ,Case No. 76 of 1938 he had urged the same point but ,it was not pressed.
Mukherjee admitted in his evidence as P. W. 4 that all his applications were drawn up according to his instructions but despite this fact he did not press the allegations made in the miscellaneous cases.
It was accordingly held on the authority of Annada Kumar Roy and Another vs Sheik Madan and Others (1) and Mahadeo Prasad Bhagat vs Bhagwat Narain Singh (2) that the principle of constructive resjudicata is applicable to execution proceedings.
The view taken by the Court was that having made the allegations in the miscellaneous oases and then abandoned them, the judgment debtor (1) (2) A.I.R. 1938 Patna 427.
391 was precluded from raising the plea of jurisdiction of the court to execute the decree: Mukherjee preferred an appeal to the High Court.
The matter came up before Harries C. J. and Sarkar J.
The learned Chief Justice held that the Asansol Court not only sent what purported to be a certificate under section 41 of the Civil Procedure Code to the High Court, but intended such certificate to be a certificate of non satisfaction.
He did not agree with the Subordinate Judge that the document was not intended to be a certificate and was merely an intimation that the first attempt at execution ' had failed.
In the view of the learned Chief Justice there was no need for the Court at Asansol to send any intimation at all.
The learned Chief Justice agreed that upon a true construction of section 41, failure to execute the decree at the first attempt for non appearance of the decree holder was not the total failure to, execute the decree as contemplated in that section.
He, however, held that the fact that the certificate was sent when it should not have been sent cannot affect the question if, as he held, the certificate was intended to be a certificate of non satisfaction.
The learned Chief Justice referred to a number of authorities in support of his conclusion.
He accordingly held that the Asansol Court had ceased to have jurisdiction to execute the decree and was not entitled to entertain the second application for execution.
Upon the question of res judicata the learned Chief Justice observed that " a judgment delivered by a Court not competent to deliver it cannot operate as res judicata and the order of the Subordinate Judge of Asansol, being wholly without jurisdiction, cannot be relied upon to found a defence upon the principle of res judicata.
" He went on to say: "It is true that the appellant could and should have raised the question in the second execution case that the Asansol Court had no jurisdiction ' in the absence of a certificate of non satisfaction from the High Court to entertain the application.
But in my view though this, point was neither made nor pressed, these orders of the learned 392 Subordinate Judge in the second execution application cannot be urged as a bar to the present application under the doctrine of res judicata.
It is true that section 11 of the Code of Civil Procedure does not apply to execution proceedings, but it has been held by their Lordships of the Privy Council that the principles of the law relating to resjudicata do apply to execution proceedings and Mr. Atul Gupta has urged that the present application is barred by res judicata. . .
He drew a ' distinction between the case of an irregular assumption of jurisdiction and want of inherent jurisdiction and holding that the order of the Subordinate Judge at Asansol fell under the latter category, he came to the conclusion that the order is wholly null and void and cannot be pleaded in bar of the application on the principle of res judicata.
It has been contended before us on behalf of the appellant (assignee decree holder) that the execution Court at Asansol never lost jurisdiction over the execution proceedings and that what purported to be a certificate under section 41 of the Civil Procedure Code was no more than a mere intimation to the High Court that the execution case had been dismissed only for default, that it was no failure to execute the decree within the meaning of section 41 of the Civil Procedure Code, that in any case the subsequent orders of the High Court passed from time to time in the presence of the parties conferred jurisdiction upon the execution Court to proceed with the execution and that in any event the question whether the execution Court had or had not jurisdiction to execute the decree was barred by the principle of res judicata.
Having heard learned counsel for the parties, we are of opinion that the appeal can be dis posed of on the ground of res judicata without entering into other questions.
It cannot be disputed that the transferee Court was invested with jurisdiction by the High Court when its decree was transferred to it for execution.
The first application for execution of the decree was dismissed 393 for default on February 27, 1932, and a document purporting to be a certificate of non satisfaction under section 41 of the Civil Procedure Code was sent by the execution Court to the High Court.
The decree was admittedly not retransmitted for execution by the High Court.
Despite this fact the decreeholder made a second application for execution on November 24, 1932, (Execution Case No. 224 of 1932).
Notice was duly served upon the judgmentdebtor but he preferred no objection before the execution Court that it had no jurisdiction to execute the decree.
This is the first occasion on, which he could have raised the plea of jurisdiction.
The second occasion arose when the decree holder filed an affidavit (Exhibit C) before the High Court on March 17, 1933, praying that certain directions should be given to the execution Court for the sale of Sripur properties and for an order discharging the Receiver.
Notice was duly served upon the judgment debtors, including Mukherjee (Exhibit 13) and the order granting the prayers of the decree holder was passed on March 27, 1933 (Exhibit F. 5).
The judgmentdebtor could have pointed out that the Asansol Court was functus officio after sending the certificate under section 41 and had no further jurisdiction to sell the property in execution but no such objection was raised.
This order clearly recites that notice was sent to the Chatterjees as well as to Mukherjee and was proved by an affidavit to have been duly served upon them.
The decree holder 's prayer was granted and in pursuance of the order of the High Court the property was sold and was purchased by the decreeholder for Rs. 20,000, whereupon Mukherjee started Miscellaneous Case No. 53 of 1933 for setting aside the sale.
In this application (Exhibit E) the judgment debtor raised the question of jurisdiction in paragraph 19 which runs thus: " As the said decree has not been sent to this court for execution nor has any certificate come to this Court therefore the execution proceedings and the auction sale are wholly irregular, illegal, fraudulent and collusive.
" 394 The order of the Subordinate Judge dated January 29, 1934, by which he set aside the sale does not mention that the plea raised in paragraph 19 of the application was pressed.
The decree holder who was aggrieved by this order preferred two appeals Nos. 254 and 255 of 1934.
The order of the High Court (Exhibit F. 2) dated July 11, 1935, shows that the decision of the Subordinate Judge setting aside the sale was confirmed.
It appears that the judgmentdebtors had raised the question that the decree could not be executed 'without the decree holder applying for making the decree absolute.
In view of this dispute the learned Judges added in the order that although they were confirming the order of the Subordinate Judge setting aside the sale, the judgment debtors will not be entitled to raise any objection as to the nature of the decree which in their opinion was executable under the terms of the compromise arrived at by the parties concerned.
Here again no objection was raised by the judgment debtors that the execution Court had no jurisdiction to execute the decree and sell the property.
The next occasion when the objection to jurisdiction should have been raised was when the property was to be resold.
Mukherjee started Miscellaneous Case No. 62 of 1936 on April 2, 1936, (Exhibit 1), in which he raised all sorts of objections to the execution but nowhere stated that the execution Court had no jurisdiction to sell the property after the certificate under section 41 of the Civil Procedure Code had been sent to the High Court.
The property was sold for the second time and was purchased by the decreeholder on April 22, 1936.
Mukherjee preferred an appeal No. 238 of 1936 and at the same time started a Miscellaneous Case No. 80 of 1936 in the execution.
Court to set aside the sale.
No plea of jurisdiction was raised either in the grounds of appeal to the High Court or in the application f or setting aside the execution sale.
The appeal was disposed of by consent of parties with the direction that Miscellaneous Case No. 80 of 1936 should be reheard by the 395 execution Court.
The sale was set aside on rehearing.
Mukherjee then started Miscellaneous Case No, 40 of 1938 under section 47 of the Civil Procedure Code on April 4, 1938.
The objection of lack of jurisdiction in the execution Court was again missing in this application.
The application was dismissed and the appeal against it was also dismissed on May 25, 1938.
When a the property was sold for the third time, Mukherjee started Miscellaneous Case No. 76 of 1938 on June 27, 1938, for setting aside the sale (Exhibit E. 4).
In paragraph 20 of his application he stated: "That this court has no jurisdiction to entertain this application for execution without a fresh certificate (sic) the court passing the decree under executions The previous certificate creating jurisdiction in the present court has long expired after the dismissal of the previous execution case.
The whole proceeding and the sale thereunder is not only illegal and materially irregular but is absolutely void for want of jurisdiction.
" This plea was apparently not pressed and the Miscellaneous Case was dismissed on June 30, 1938.
Mukherjee filed an appeal F. M. A. No. 262 of 1938 (Exhibit F.) on August 23, 1938, but the appeal was dismissed on August 5, 1940, on the ground, that there was no material irregularity in publishing the sale and the colliery had not been sold at an inadequate price on ' account of any such irregularity.
This again shows that no question of jurisdiction was raised before the learned Judges of the High Court.
Then followed the review application (Exhibit B) presented on November 25, 1940, to the High Court.
Paragraphs 11, 12 and 13 of this application are important and they run as follows " 11.
That after passing the '.
judgment in F.A. No.246 of 1937 on 13th August, 1940,your petitioner got the records of Suit No. 1518 of 1923 of the Original Side of this Hon 'ble Court searched for ascertaining the amount due under the decree of the said 396 suit and came to, know for the first time on 23rd August, 1940, that after dismissal of the old Execution Case No. 296 of 1931 by the Subordinate Judge of Asansol on 27th February, 1932, the result of the said execution case was sent to the Original Side of this Hon 'ble Court under section 41, Civil Procedure Code, and that was received on 11th March, 1932, and that no fresh , certificate of non satisfaction of the decree was sent by the Original Side of this Hon 'ble Court for fresh execution and so there was no basis on which the Execution Case No. 224 of 1932 could be started in the Court of the Subordinate Judge of Asansol.
That your petitioner submits that the copies of the decree and certificate of non satisfaction were taken by the decree holder on detaching the same from the records of old used Execution Case No. 296 of 1931 and fraudulently used afterwards in Execution Case No. 224 of 1932 by practising fraud upon the Court.
That your petitioner further begs to submit that he was misled by order of the Court of the Subordinate Judge which runs as follows: S 'Register.
Let the certificate of non satisfaction received be annexed to the record. ' " This application was rejected on May 8, 1941, and the order of the learned Judges which is brief may be reproduced in full: "The ground for review is that after the dismissal of the said appeal the petitioner discovered that the execution proceedings in which the sale took place was held by the executing Court although that Court did not receive any certificate of non satisfaction from the Court which passed the decree under execution.
This objection does not properly come for investigation in a proceeding under Order XXI, rule 90, Civil Procedure Code.
Even if the allegation of the petitioner about the discovery of new matter is correct, it cannot affect the decision of the appeal which we have dismissed.
" 397 The foregoing narrative of the various stages through which the execution proceedings passed from time to time will show that neither at the time when the execution application was made and a notice served upon the judgment debtor, nor in the applications for setting aside the two sales made by him did the judgment debtor raise any objection to execution being proceeded with on the ground that the execution Court had no jurisdiction to execute the decree.
The failure to raise such an objection which went to the root of the matter precludes him from raising the plea of jurisdiction on the principle of constructiveres judicata after the property has been sold to the auction purchaser who has entered into possession.
There ate two occasions on which the judgment debtor raised the question of, jurisdiction for the first time.
He did not, however, press it with the result that the objection must be taken to have been impliedly overruled.
One such occasion was when the property was sold for the second time and was purchased by the decree holder for Rs. 20,000.
In paragraph 19 of his application dated July 7, I 933 (Exhibit E) to set aside the sale he challenged the jurisdiction of the Court, but the order of the Court dated the 29th January, 1934, does not show that the plea was persisted in.
The second occasion was when the property was sold for the third time and in his application (Exhibit E.4) dated June 27, 1938, for setting aside the sale he raised the question in paragraph 20.
The objection application was dismissed but there is no trace of the judgment debtor having pressed this objection.
When he preferred an appeal to the High Court, he did not make the plea of jurisdiction a ground of attack against the execution of the decree and the appeal was dismissed on other points.
Finally he filed a review application and in paragraphs 11, 12 and 13 he raised the objection to execution in more elaborate words, but the application was rejected by the High Court on the ground that such an objection did not fall within the purview of Order XXI, rule 90, of the Code of Civil Procedure 398 This order therefore became final.
The judgmentdebtor admitted that the two applications (Exhibits E and E. 4) were prepared according to his instructions.
It is not possible therefore for the judgmentdebtor to escape the effect of the above orders which became binding upon him.
That the principle of constructive res judicata is applicable to execution proceedings is no longer open to doubt.
See Annada Kumar Boy and Another vs Sheik Madan and Others (1), and Mahadeo Prasad Bhagat vs Bhagwat Narain Singh(2).
In the first case an application was made by a certain person for execution of a decree and no objection was raised that the decree was not maintainable at the instance of the applicant and the application was held to be maintainable.
It was held that no further objection on the score, of the maintainability of a fresh application for execution on the part of the same applicant could be raised.
In the second case a money decree had been obtained on the foot of a loan which was the subject matter of a mortgage and the property was sold in execution.
The judgment debtor raised the question of the validity of the execution proceedings and objected that the execution court had no jurisdiction to sell the property in execution of a money decree as no sanction of the Commissioner had been obtained under section 12 A,Chota Nagpur Encumbered Estates Act.
The objection was not decided but the objection petition was dismissed with the result that the property came into the possession of the auction purchaser.
In an action for a declaration that the sale to the purchaser was void for want of sanction of the Commissioner it was held that as the point was raised although not decided in the objection petition under section 47, it was res judicata by reason of Explanation IV to section 11.
The Privy Council as early as 1883 in Ram Kirpal Shukul vs Mussamat Rup Kuari(3) held that the decision (1) (3) (1884) 11 I. A. 37.
(2) A.I. R. 1938 Patna 428.
399 of an execution Court that the decree on a true construction awarded future mesne profits was binding between the parties and could not in a later stage of the execution proceedings be set aside.
Their Lordships ruled that the binding force of such a decision depends upon general principles of law and not upon section 13, Act X of 1877, corresponding to section 11 of the present Code.
In that case the Subordinate Judge and the District Judge had both held that the decree awarded mesne profits, but their decision was reversed by the Calcutta High Court.
The Full Bench of that Court also held that the law of res judicata did not apply to proceedings in execution of the decree.
This decision was reversed in appeal by the Privy Council.
At page 43, Sir Barnes Peacock, who delivered the judgment of the Board, observed "The High Court assumed jurisdiction to decide that the decree did not award mesne profits, but, whether their construction was right or wrong, they erred in deciding that it did not, because the parties were bound by the decision of Mr. Probyn, who, whether right or wrong, had decided that it did; a decision which, not having been appealed, was final and binding upon the parties and those claiming under them.
" In Raja of Bamnad vs Velusami Tevar and Others(1) an assignee of a partially executed decree applied to the Subordinate Judge to be brought on the record in place of the decree holder.
The judgment debtor denied the assignment and the liability of certain properties to attachment and alleged that the right to execute the decree was barred by limitation.
The Subordinate Judge recognized the assignment, allowed the assignee to execute the decree and gave his permission to file a fresh application for attachment.
This order was not appealed against.
In the final proceedings.
The Subordinate Judge permitted to judgment debtors to raise again the plea of limitation.
In the course of the judgment Lord Moulton observed as follows: (1) (1921) 48 I.A.145, 52 400 "Their Lordships are of opinion that it was not open to the learned Judge to admit this plea.
The, order of December 13, 1915, is a positive order that the present respondent should be allowed to execute the decree.
To that order the plea of limitation, if pleaded, would according to the res pondents ' case have been a complete answer, and therefore it must be taken that a decision was against the respondents on the plea.
No appeal was brought against that order, and therefore it stands as binding between the parties.
Their Lordships are of opinion that it is not necessary for them to decide whether or not the plea would have succeeded.
It was not only competent to the present respondents to bring the plea forward on that occasion but it was incumbent on them to do so if they proposed to rely on it,, and moreover it was in fact brought forward and decided upon.
" Sha Shivraj Gopalji vs Edappakth Ayissa Bi and Others (1) : In this case the decree holder in t e earlier execution proceedings could have raised a plea that the judgment debtor had an interest in certain property which could be attached under his decree but the plea was not raised through his own default and the execution was dismissed.
It was held under such circumstances that the dismissal operates as res judicata in the subsequent execution proceedings and even apart from the provisions of section 11 of the Civil Procedure Code, it is contrary to principle to allow the decree bolder in fresh proceedings to renew the same claim merely because he neglected at a proper stage in previous proceedings to support his claim by the argument of which he subsequently wishes to avail himself.
There is ample authority for the proposition that even an erroneous decision on a question of law operates as resjudicata between the parties to it.
The correctness or otherwise of a judicial decision has no bearing upon the question whether or not it operates as res judicata.
A decision in the previous execution (1) A.I.R. 1949 P.C. 302; 54 C.W.N, 54.
401 case between the parties that the matter was not within the competence of the executing Court even though erroneous is binding on the parties; see Abhoy Kanta Gohain vs Gopinath Deb Goswami and Others(1).
The learned Chief Justice concedes that the principle of res judicata applies to the execution proceedings but he refused to apply it to the present case on the ground that there was lack of inherent jurisdiction in the execution Court to proceed with the execution.
He relied upon Ledgard and Another vs Bull (2).
This case is distinguishable upon the facts.
This was a suit instituted before the Subordinate Judge for infringement of certain exclusive rights secured to the plaintiff by three Indian patents.
Under the Patents Act the suit could be brought only before the District Judge.
The defendant raised an objection to the jurisdiction of the Court.
It appears that , subsequently the defendant joined the plaintiff in petitioning the District Judge to transfer the case to his own Court.
This was done.
The suit was transferred under section 25 of the Civil Procedure Code.
It was admitted that the suit could not be transferred unless the Court from which the transfer was sought to be made had jurisdiction to try it.
The defendant adhered to the plea of jurisdiction throughout the proceedings but it was urged that by his subsequent conduct he had waived the objection to the irregularity in the institution of the suit.
Their Lordships held that although a defendant may be barred by his own conduct from ' objecting to the irregularity in the institution of the suit, yet where the Judge had no inherent jurisdiction over the subject matter of the suit, the parties cannot by their mutual consent convert it into a proper judicial process.
This decision has no bearing upon the present case as no question of constructive res judicata arose in that case.
The cases of Gurdeo Singh V. Chandrika Singh and Chandrikah Singh vs Rashbehary Singh (3) and (1) A.I.R. 1943 Cal. 460.
(2) (1886) 13 I.A. 134.
(3) Cal.
402 Rajlakshmi Dasee vs Katyayani Dasee (1) are both dis tinguishable as they did not involve any question of constructive res judicata.
Two cases of the Allahabad High Court (1) Lakhmichand and Others vs Madho Rao (2), (2) Baghubir Saran and Another vs Hori Lal and Another (3) were also relied upon in the judgment under appeal.
, The first was a case of the grant of assignment of the, land revenue of a village in favour of the grantee.
He mortgaged it and a suit brought on foot of the mortgage was decreed.
In a subsequent suit for a declaration that the previous decree of the Court was null and void by reason of the fact that the suit was not cognisable in the absence of a certificate from the Collector as required by the Pensions ' Act authorizing the trial of such a suit, it was held that the decree was one without jurisdiction and that it did not operate as res judicata in the subsequent suit for which the certificate was obtained.
It was obvious that the statutory provisions of the Act forbade the trial of any suit without the certificate of the Collector.
There was, therefore, an initial lack of jurisdiction to try the case and the case is inapplicable to the facts of the present case.
The second case which involved the question of territorial jurisdiction was in our view not correctly decided.
There a suit against a minor for enforcement of the mortgage was decreed in respect of property which was beyond the territorial jurisdiction of the Court passing the decree.
When the decree was transferred for execution to the Court within whose jurisdiction the property was situate, it was objected that the decree was a nullity.
The objection was overruled and the objector was referred to file a regular suit.
In the regular suit filed by him it was decided that an independent suit was maintainable for avoiding the decree although no objection was raised to jurisdiction in the Court passing the decree.
It was also held that the bar of section 11, Explanation IV, of (1) Cal.
639 (2) (1030) I. L.R. 52 All. 868.
(3) All.
403 the Code of Civil Procedure did not apply to the case.
We think that although section 21 of the Code of Civil Procedure did not apply in terms to the case, there is no reason why the principle underlying that section should not apply even to a regular suit.
The objection to jurisdiction must be deemed to have been waived and there was no question of inherent lack of jurisdiction in the case.
The suit was clearly barred by the principle of res judicata and was wrongly decided.
The question which arises in the present case is not whether the execution Court at Asansol had or had not jurisdiction to entertain the execution application after it had sent the certificate under section 41 but whether the judgment debtor is precluded by the principle of constructive resjudicata from raising the question of jurisdiction.
We accordingly hold that the view taken by the High Court on the question of res judicata is not correct.
We allow the appeal, set aside the judgment and the decree,of the High Court and restore that of the Subordinate Judge dismissing the application of the judgment debtor.
The appellant will be entitled to his costs here and hitherto.
Appeal allowed.
Agent for the appellant ': P. K. Chatterjee.
Agent for the respondent No. 1: B. B. Biswas.
| A decree passed by the Calcutta High Court on its Original Side in 1923, was transferred by that Court for execution to the Court of the Subordinate Judge of Asansol in 1931 with a certified of the decree, copy of, the order of transmission and certificate of partial satisfaction.
The decree holder applied for execution to the Asansol Court but the application was dismissed for default in February,, 1932, and the Asansol Court sent to the Calcutta High Court what purported to be a certificate under section 41, Civil Procedure Code, stating that the execution case was dismissed for default, but neither the copy of the decree nor a covering letter was sent to the High Court.
The decree holder again applied for execution in November, 1932, and a certain colliery was proclaimed for sale on April 3, 1933.
Meanwhile, other application of the decree holder, the High Court passed an order on March 27, 1933, discharging a Receiver who had been appointed in 1926 and granting liberty to the Court of Asansol to sell the colliery in execution by public auction.
After this order was communicated to the Asansol Court, it sold the colliery in auction.
The sale was set aside and the colliery was resold.
Again the sale was set aside and after the property was sold for the third time the judgment debtor applied under section 47 and 0.
XXI, r. 90, Civil Procedure Code, for setting aside the sale on the ground that after the dis missal of the execution case in February, 1932, and the transmission of a certificate under section 41 to the High Court, the Asansol Court had no jurisdiction to execute the decree.
Held per DAS J.
The order of the High Court dated March 27, 1933, may well be regarded as in substance &mounting to,an order of transmission of the decree to the Asansol Court for execution under section 39, Civil Procedure Code, and after the order had been communicated to the Asansol ' Court, the latter became fully seized of jurisdiction as the executing Court.
The omission to send 378 a copy and a fresh certificate of non satisfaction was a mere irregularity which did not affect the jurisdiction of the Asansol Court: Per GHULAM HASAN J.
As the judgment debtor did not raise the present objection either when the decree holder made a second application for execution to the Asansol Court in November, 1932, or when the decree holder applied to the High Court in March, 1933, for giving liberty to the Asansol Court to proceed with the execution by sale of the colliery, or in the proceedings for setting aside the sales of the colliery in 1936 or in the appeals therefrom though several other objections were raised, and on one or two occasions when he did raise it, he never pressed the objection, he was precluded from raising the plea at a later stage on the principle of constructive res judicata.
The mere fact that the question related to the jurisdiction of the Court would not prevent the operation of the rule of res judicata.
MAHAJAN and VIVIAN BOSE JJ.
On either of the grounds stated by DAS J. and GHULAM HASAN J., the judgment debtor was precluded from raising the objection that the Court of Asansol had no jurisdiction to execute the decree.
Ledgard and Another vs Bull ([1886] 13 I.A. 134), Gurdeo Singh vs Chandrika Singh ([1909] I.L.R. , Rajlakshmi Dasi vs Katyayannee ([1911] I.L.R. and Lakhmichand and others vs Madho Rao ([1930] I.L.R. 52 All.
868)distinguished.
Raghubir Saran vs Horilal and Another ([1931] I.L.R. 53 All.
560) overruled.
Annada Kumar Boy and Another vs Sheik Madan and Others , Mahadeo Prasad Bhagat vs Bhagwat Narain Singh (A.I.R. 1938 Pat.
428), Bam Kirpal Sukul vs Mussamat Rup Kueri ([1884] 11 I.A. 37), Raja of Ramnad vs Veluswami Tevar and Others ([1921]48 I.A. 45) and Sha Shivraj Gopalji vs Edappakath Ayissa Bi and Others (A.I.R. referred to.
|
Appeal No. 294 of 1955.
Appeal by special leave from the Judgment and Order dated the 7th September, 1955, of the Nagpur High Court, in Civil Revision No. 833 of 1954.
B.B. Tawakley, (K. P. Gupta, with him for the appellant.
R. section Dabir and R. A. Govind, for respondent No. 1. 1955.
December 2.
The Judgment of the Court was delivered by BOSE J.
The appellant was a candidate for the office of President of the Municipal Committee of Damoh.
The respondents (seven of them) were also candidates.
The nominations were made on forms supplied by the Municipal Committee but it turned out that the forms were old ones that had not been brought up to date.
Under the old rules candidates were required to give their caste, but on 23 7 1949 this was changed and instead of caste their occupation had to be entered.
The only person who kept himself abreast of the law was the first respondent.
He struck out the word "caste" in the printed form and wrote in "occupation" instead and then gave his occupation, as the new rule required, and not his 1031 caste.
All the other candidates, including the appellant, filled in their forms as they stood and entered their caste and not their occupation.
The first respondent raised an objection before the Supervising Officer and contended that all the other nominations were s; invalid and claimed that he should be elected as his was the only valid nomination paper.
The objection was overruled and the election proceeded.
The appellant secured the highest number of votes and was declared to be elected.
The first respondent thereupon filed the election petition out of which this appeal arises.
He failed in the trial Court.
The learned Judge held that the defect was not substantial and so held that it was curable.
This was reversed by the High Court on revision.
The learned High Court Judges referred to a decision of this Court in Rattan Anmol Singh vs Atma Ram(1) and held that any failure to comply with any of the provisions set out in the various rules is fatal and that in such cases the nomination paper must be rejected.
We do not think that is right and we deprecate this tendency towards technicality; it is the substance that counts and must take precedence over mere form.
Some rules are vital and go to the root of the matter: they cannot be broken; others are only directory and a breach of them can be overlooked provided there is substantial compliance with the rules read as whole and provided no prejudice ensues; and when the legislature does not itself state which is which judges must determine the matter and, exercising a nice discrimination, sort out one class from the other along broad based, commonsense lines.
This principle was enunciated by Viscount Maugham in Punjab Co operative Bank Ltd., Amritsar vs Incometax Officer, Lahore(2) and was quoted by the learned High Court judges ' "It is a well settled general rule that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially".
(1) ; (2) [1940] L.R. 07 I.A. 464, 476, 1032 But apart from that, this is to be found in the Act itself.
The learned High Court Judges were of opinion that the directions here about the occupation were mandatory.
That, we think, is wrong.
The present matter is governed by section 18 of the Central Provinces and Berar Municipalities Act (II) of 1922.
Among other things, the section empowers the State Government to "make rules under this Act regulating the mode. . of election of presidents. ." and section 175(1) directs that "all rules for which provision is made in this Act shall be made by the State Government and shall be consistent with this Act", Now one of the provisions of the Act, the one that directly concerns us, is set out in section 23: "Anything done or any proceeding taken under this Act shall not be questioned on account of any defect or irregularity not affecting the merits of the case".
The rules have therefore to be construed in the light of that provision.
Rule 9 (1)(i) states that " each candidate shall. .deliver to the Supervising Officer a nomination paper completed in the form appended and subscribed by the candidate himself as assenting to the nomination and by two duly qualified electors as proposer and seconder".
The amended form requires the candidate to give, among other things, his name, father 's name, age, address and occupation; and rule 9(1)(iii) directs that the Supervising Officer "shall examine the nomination papers and shall decide all objections which may be made to any nomination and may either on such objection or on his own motion, after such summary enquiry, if any, as he thinks necessary, refuse any nomination on any of the following grounds: * * * * 1o33 (C) that there has been any failure to comply with any of the provisions of clause (i). . " It was contended that the word "may" which we have underlined above has the force of "shall" in that context because clause (a) of the rule reads "(a) that the candidate is ineligible for election under section 14 or section 15 of the Act".
It was argued that if the candidate 's ineligibility under those sections is established, then the Supervising Officer has no option but to refuse the nomination and it was said that if that is the force of the word "may" in a case under clause (a) it cannot be given a different meaning when clause (c) is attracted.
We need not stop to consider whether this argument would be valid if section 23 had not been there because the rules cannot travel beyond the Act and must be read subject to its provisions.
Reading rule 9(1) (iii) (c) in the light of section 23, all that we have to see is whether an omission to set out a candidate 's occupation can be said to affect "the merits of the case".
We are clear it does not.
Take the case of a man who has no occupation.
What difference would it make whether be entered the word "nil" there, or struck out the word "occupation" or placed a line against it, or just left it blank? How is the case any different, so far as the merits are concerned, when a man who has a occupation does not disclose it or misnames it, especially as a man 's occupation is not one of the qualifications for the office of President.
We are clear that this part of the form is only directory and is part of the description of the candidate;, it does not go to the root of the matter so long as there is enough material in the paper to enable him to be identified beyond doubt.
It was also argued that there was a reason for requiring the occupation to be stated, namely, because section 15(k) of the Act disqualified any person who "holds any office of profit" under the Committee.
But disclosure of a candidate 's occupation would not necessarily reveal this because the occupation need only be stated in general terms such as "service" or 1034 "agriculture" and need not be particularised; also, in any 'event, section 15 sets out other grounds of dis qualification which are not required to be shown in the form.
As regards our earlier decision.
That was a case in which the law required the satisfaction of a particular official at a particular time about the identity of an illiterate candidate.
That, we held, was the substance and said in effect that if the law states that A must be satisfied about a particular matter, A 's satisfaction cannot be replaced by that of B; still less can it be dispensed with altogether.
The law we were dealing with there also required that the satisfaction should be endorsed on the nomination paper.
That we indicated was mere form and said at page 488 "If the Returning Officer had omitted the attestation because of some slip on his part and it could be proved that he was satisfied at the proper time, the matter might be different because the element of his satisfaction at the proper time, which is of the substance, would be there, and the omission formally to record the satisfaction could probably, in a case like that, be regarded as an unsubstantial technicality".
A number of English cases were cited before us but it will be idle to examine them because we are concerned with the terms of section 23 of our Act and we can derive no assistance from decisions that deal with other laws made in other countries to deal with situations that do not necessarily arise in India.
The appeal succeeds and is allowed with costs here and in the High Court.
The order of the High Court is set aside and that of the Civil Judge restored.
| The appellant was a candidate for the office of President of the Municipal Committee, Damoh.
The nomination was made in an old form under the old rules which required a candidate to enter his caste.
Under the new rules this was changed and occupation had to be stated instead, which none except the respondent No. I had done.
Objection to the validity of the appellant 's nomination paper was overruled by the Supervising Officer.
The appellant secured the highest number of votes and was declared elected.
The respondent No. 1, thereupon, filed the election petition.
He failed in the Election Tribunal which held that the defect was not substantial and was curable.
The High Court, however, reversed this decision in revision, holding that failure to comply 'with any of the provisions set out in the rules was fatal and in such cases the nomination paper should be rejected.
1030 Held, that the rule requiring the occupation of the candidate to be stated in the nomination form was directory and not mandatory In character and as the failure to comply with it did not affect the merits of the case as laid down in section 23 of the Act, the election could not be set aside on that ground.
Rattan Anmol Singh vs Atma Ram ([1955] 1 S.C.R. 481), dis tinguished.
Courts should not go by mere technicalities but look to the substance.
Some rules may be vital, while others are merely directory, and a breach of these may be overlooked, provided there is substantial compliance with the rules read as a whole and no prejudice ensues.
When the Act does not make a clear distinction, it is the duty of the court to sort out one class from the other along broad based commonsense lines.
Punjab Co operative Bank Ltd., Amritsar vs Income Tax Office? , Lahore ([1940] L.R. 67 I.A. 464), referred to.
|
Appeal No. 3 of 1951.
, Appeal from the Judgment and Order dated March 11, 1949, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Original Side Appeal No. 3 of 1947, &rising out of the Judgment and Order dated November 15, 1946, of Clark J. and made in the exercise of the Ordinary Original Civil Jurisdiction of the High Court in Application No. 599 of 1946.
M. C. Setalvad (Attorney General for India) (A. Balasubramanian, with him) for the appellant.
N. Baja Gopala Iyengar for the respondent.
December 9.
The Judgment of Mehr Chand Mahajan, Das and Ghulam Hasan JJ. was delivered by Das J. Vivian Bose J. delivered a separate Judgment.
DAS J.
This appeal arises out of an application made by the Official Receiver representing Sha Mulchand & Company Ltd. (in liquidation) under section 38 of the Indian Companies Act for rectification of the register of the Jawahar Mills Ltd. Sha Mulchand & Company Ltd. (hereinafter referred to as " the Company") was incorporated in 354 1937 as a private limited company.
At all material times it consisted of two members,.
T. V. T. Govindaraju Chettiar and K. N. Sundara Ayyar.
The Jawahar Mills Ltd. (hereinafter called " the Mills") was also incorporated in 1937 with an authorised capital of Rs. 10,00,000 divided into one lac shares of Rs. 10 each.
The Company was the managing agent of the Mills from its inception and applied for and was allotted 5,000 ten rupee shares Nos. 1.5048 to 20047 on which Rs. 5 per share had been paid.
The Company continued to act as the managing agent of the Mills till the 30th June, 1939, on which date it resigned the managing agency.
Prior to the Company 's resignation the two members of the Company had entered into an agreement with one M. A. Palaniappa Chettiar, a partner of the incoming managing agency firm, up on certain terms which need not be referred to in greater detail.
Within two months after the change of managing agents, the Mills made two calls, namely, one on the 22nd August, 1939, for Rs. 2 per share payable on the 1st October, 1939, and the other on the 1st October, 1939, for Rs. 3 payable, on the 1st December, 1939.
The Company did not pay either of the calls.
On the 23rd January, 1940, Govindaraju Chettiar was adjudged insolvent on the application of Sundara Ayyar.
This insolvency of Govindaraju Chettiar was eventually annulled in 1944.
During this period Govindaraju Chettiar, in law ', ceased to be a director of the Company, although it is alleged that he nevertheless continued to take part in the management of the Company.
By a resolution of the Board of Directors of the Mills passed on the 12th August, 1940, the new managing agents were empowered to give notices to such persons as had not paid the allotment money and the call money within the date fixed and to intimate them that in default their shares would be ' forfeited.
A notice was issued on the 16th September, 1940, and two copies thereof are said to have been sent to Sundara Ayyar and Govindaraju Chettiar.
355 No payment having been made, the 5,000 shares held by the Company were forfeited by a resolution of the Board of Directors of the Mills.
The auditor of the Mills having pointed out that the purported forfeiture was irregular and illegal, this forfeiture was cancelled.
By a resolution passed by circulation on the 26th February, 1941, the Board of Directors of the Mills resolved that a notice be sent to the Company informing it that it was in arrears with calls to the extent of Rs. 25,000, that the amount must be paid on or before the 31st March, 1941, and that, in default, its shares would be forfeited.
A notice dated the 15th March, 1941, was accordingly addressed to the Company and sent by registered post with acknow ledgment due.
It appears that the notice was actually posted on the 17th March, 1941, and was received by Govindaraju Chettiar on the 20th March, 1941.
The Company did not pay the arrears of calls.
On the 5th September, 1941, the Board of Directors of the Mills resolved that " the 5,000 shares Nos. 15048 20047 standing in the name of the Company have been forfeited.
" On the 10th September, 1941, the Mills wrote a letter to the Company informing the latter that the Directors of the Mills bad at their meeting held on the 5th September, 1941, forfeited the 5,000 shares.
There is no dispute that this letter which was sent by registered post was returned undelivered.
On the 1st October, 1941, an entry was made in the share ledger of the Mills recording that the 5,000 shares of the Company had been forfeited.
On the 16th November, 1941, these 5,000 shares were reallotted to 14 different persons and on the 17th November, 1941, a letter was sent to the Company intimating that the forfeited shares had been reallotted and calling upon the Company to send back to the Mills all the documents relating to the original allotment of the 5,000 shares to the Company.
In the meantime on the 26th August, 1941, by an order made by the Registrar of Joint Stock Companies the Company was struck off the register of companies under section 247 356 of the Indian Companies Act.
This order of 'the Registrar was published in the Official Gazette on the 9th September, 1941, i.e., four days after the shares were forfeited and one day before the notice intimating the fact of forfeiture was sent in a registered cover which was, however, returned undelivered.
Under section 247 (5) of the Indian Companies Act the Company stood dissolved on and from the date of such publication.
The Mills having come to know of the dissolution of the Company applied to the High Court (O.P. No. 10 of 1942) praying that the name of the Company be restored to the register of companies and that after such restoration was duly advertised the Company be wound up by the Court.
A similar application was made on the 11th December, 1941, by the Income tax authorities (O.P. No. 11 of 1942).
On the 23rd February, 1942, Sundara Ayyar filed an affidavit contending, amongst other things that the Directors of the Mills had no power to forfeit the shares.
On the 2nd April, 1942, however, O.P. No. 10 of 1942 was compromised, and the Mills received Rs. 11,000 from Sundara Ayyar in full satisfaction of their claim against the Company.
On the 25th June, 1942, O.P. No. 11 of 1942 was also compromised and Sundara Ayyar paid up the claim of the Income tax authorities.
The two petitions for restoration of the Company were accordingly dropped.
On the 27th June, 1942, Sundara Ayyar filed a suit against the Mills and others including Palaniappa Chettiar claiming a declaration that the forfeiture by the Mills of the 5,000 shares was illegal and inoperative and directing the Mills to pay to the plaintiff and the third defendant representing the estate of Govindaraju Chettiar the value of the forfeited shares with dividend or interest thereon and directing Palaniappa Chettiar to pay the plaintiff and the third defendant the sum of Rs. 25,000.
This suit was dis missed on the 17th November, 1943, on the ground that Sundara Ayyar, who was only a member of the dissolved Company, had no locus standi and could 357 have no relief personally.
Sundara Ayyar filed an appeal therefrom which was dismissed as against the Mills but the case was remanded to the trial Court for the trial of his claim as against the fourth defendant, Palaniappa Chettiar.
During the pendency of Sundara Ayyar 's appeal he on the 12th August, 1944, filed O.P. No. 199 of 1944 for the restoration of the Company.
On that application an order was made on the 16th February, 1945, that the name of the Company be restored to the register of companies, that the Company be deemed to have continued in existence as if its name had never been struck off, that such restoration be advertised and that the Company be wound up by the Court and the Official Receiver do forthwith take charge of the assets and liabilities of the Company.
It was further ordered that the Official Receiver do recognise that as between the Mills and the Company, the Mills should be regarded as having been duly paid only Rs. 11,000 out of the total debt of Rs. 25,550 due ' to the Mills.
By an order made on the 21st January, 1946, leave was given to the Official Receiver to take appropriate steps regarding the 5,000 shares purported to have been forfeited by the Mills.
Accordingly on the 5th March, 1946, the Official Receiver, in the name of the Company, took out the present summons calling upon all parties concerned to show cause why the share register of the Mills should not be rectified by restoring the name of the Company to the said register in respect of 5,000 shares numbering 15048 20047 and why such other alternative or consequential relief should not be granted to the applicant as might be just and necessary in the circumstances of the case.
The Mills contended, in opposition to that application, that the shares had been properly forfeited, that the Company was, on the principles of estoppel, acquiescence and laches, precluded from challenging the forfeiture, that the application was barred by limitation and that the shares having already been allotted to other persons, who had not been made 358 parties to the application, order for rectification of the register in respect of those shares could be made.
The summons came up for hearing before Mr. Justice Clark.
The learned Judge, by his judgment dated the 15th November, 1946, held that the notice dated the 15th March, 1941, which was posted on the 17th March, 1941, and delivered on the 20th March 1941, and on which the resolution of forfeiture passed on the 5th September, 1941, was founded, was not in conformity with the provisions of articles 29 and 30 of the articles of association of the Company which required 14 clear days ' notice.
The learned judge further held that the plea of estoppel, acquiescence and laches was untenable, that article 49 of the Limitation Act did not apply either expressly or by way of analogy to the present application and that article 120, which prescribed a period of six years from the date when the right to sue accrued, would, by analogy, apply to the present proceedings and that so applied the present proceedings must be held to be within time.
Having disposed of the controversy on the above points it remained to consider the form of the order which could properly be made on the application.
It is quite clear that the specific shares having already been allotted to 14 different persons and those persons not being then before the Court, the Court could not then and there direct rectification of the register by restoring the name of the Company to the share register of the Mills in respect of those identical shares.
There was nevertheless nothing to prevent the Court even at that stage to give notice of the application to the persons to whom the shares had been reallotted and/or those who were holding the shares at the time and after thus adding them as parties thereto to make the appropriate order of rectification and, if thought fit, to also award damages to the Company.
There were, however, 16,000 shares of Rs. 10 each yet unissued.
After discussing the matter with learned advocates on both sides to which, discussion a reference will be made hereafter the 359 learned Judge, in the belief that the advocates for the parties had agreed as to the form of the order, directed that the Mills do rectify their register by inserting the name of the applicant Company as owner of 5,000 shares out of the unissued shares of Rs. 10 each and that on such insertion the Company do on or before the 15th January, 1947, pay to the Mills Rs. 25,000, being the amount of calls in arrears.
Pursuant to further directions given by the learned Judge on the 7th January, 1947, the Mills on the 10th January, 1947, received Rs. 25,000 and allotted 5,000 shares.
Although the Mills thus acted upon the order they, nevertheless, on the 6th February, 1947, filed an appeal against the order.
That appeal came up for hearing before a Bench consisting of Satyanarayana Rao and Viswanatha Sastri JJ.
It was not disputed before the appeal Court that the forfeiture was invalid, but the contentions urged were that by reason of the irregularity the forfeiture was only voidable and not void and that as the forfeiture was only voidable it was open to the Company to waive or abandon its right to dispute the validity of the forfeiture and that in fact, by its conduct, it had done so, that the claim to rectify the register was barred by limitation and that in any event rectification was impossible because the shares were not available in specie, the same having been reallotted to other persons.
The learned Judges by their judgment dated the 11th March 1949, held that the forfeiture was invalid, that the application was not barred by limitation for it was covered by article 120 of the Limitation Act.
The learned Judges recognised that where a period of limitation was prescribed for a suit or a proceeding mere delay was no bar unless it was of such a character as would lead to an inference of abandonment of the right or unless it: was established that the person against whom the action or proceeding was instituted was actually prejudiced by reason of such delay.
The learned Judges agreed with the 47 360 trial Court that no plea of acquiescence, waiver or estoppel had been established in the present case.
The learned Judges, nevertheless, thought that the question of abandonment of the right and prejudice to the appellant by reason of the delay stood on a different footing.
Then after referring to certain conduct on the part of Govindaraju Chettiar and Sundara Ayyar the learned Judges concluded that by reason of the long delay in reviving the Company and in taking proceedings under section 38 of the Indian Companies Act the Mills had been induced to put themselves in a situation in which it became impossible for them to restore the Company to the register in respect of those 5,000 shares and that in view of this conduct, if the applicants were Govindaraju Chettiar and Sundara Ayyar, it would have been a case in which relief would have been refused in the light of the principles which the learned Judges deduced from the judicial decisions referred to by them.
Then referring to the decision in Smith, Stone & Knight vs Birmingham Corporation (1) and certain text books the learned Judges took the view that it was too late in the day to adhere to the strict formalism laid down in Salomon 's case (2) and that as the tendency of modern decisions was to lift the veil of corporate personality and disregard the corporate form, the conduct of its only two members had disentitled the company from claiming the relief of rectification.
The learned Judges further held that there was no legal basis on which the form of the order could be supported.
On reading the judgment of the trial Judge and after hearing the senior advocate appearing for the Mills the learned Judges felt unable to agree that the learned advocate had agreed to the substitution of, the 6,000 out of the unissued shares for the 5,000 forfeited shares.
The resilt was that the appeal was allowed and the order of the trial Judge was set aside.
The Company by its Official Receiver has now come up before this Court with leave granted by the High Court (1) (2) ; 361 under sections 109 and 110 of the Code of Civil Procedure.
The appeal Court, it will be observed, reversed the decision of the trial Judge and decided the appeal against the Company on two grounds only, namely, (1) that the Company had by the conduct of its two members abandoned its right to challenge the forfeiture, and (2) that the form of the order could not be supported as one validly made under section 38 of the Indian Companies Act.
The learned AttorneyGeneral, appearing in support of this appeal, has assailed the soundness of both these grounds.
The learned Attorney General contends, not without considerable force, that having, in agreement with the trial Coury, held that no plea of acquiescence, waiver or estoppel had been established in this case, the appeal Court should not have allowed the Mills to raise the question of abandonment of right by the Company, inasmuch as no such plea of abandon ment had been raised either in the Mills ' affidavit in opposition to the Company 's application or in the Mills grounds of appeal before the High Court.
Apart from this, the appeal Court permitted the Mills to make out a plea of abandonment of right by the Company ,as distinct from the pleas of waiver, acquiescence and estoppel and sought to derive support for this new plea from the well known cases of Prendergast vs Turton(1), Clark & Chapman vs Hart(2) and Jones vs North Vancouver Land and Improvement, Co.(3).
A perusal of the relevant facts set out in the several reports and the respective judgments in the above cases will clearly indicate that apart from the fact that some of them related to collieries which were treated on a special footing, those cases were really cases relating to waiver or acquiescence or estoppel.
Indeed in Clarke 's case (2) while Lord Chelms ford referred to the decision in Prendergast 's case(1) as a case of abandonment of right, Lord Wensleydale read it as an instance of acquiescence and estoppel.
Unilateral act or conduct of a person, (1) ; (3) [1910] A.C. 317.
(2) 6 H.L.C. 632; 10 E.R. I443.
362 that is to sky act or conduct of one person which is not relied upon by another person to his detriment, is nothing more than mere waiver, acquiescence or laches, while act or conduct of a person amounting to an abandonment of his right and inducing another person to change his position to his detriment certainly raises the bar of estoppel.
Therefore, it is not intelligible how, having held that no plea of waiver, acquiescence or estoppel had been established in this case, the appeal Court could, nevertheless, proceed to give relief to the Mills on the plea of abandonment by the Company of its rights.
If the facts on record were not sufficient to sustain the plea of waiver, acquiescence or estoppel, as hold by both the Courts, we are unable to see how a plea of abandonment of right which is an,aggravated, form of waiver, acquiescence or laches and akin to estoppel could be sustained on the self same facts.
Further, whatever be the effect of mere waiver, acquiescence or laches on the part of a person on his claim to equitable remedy to enforce his rights under an executory contract, it is quite clear, on the authorities, that mere waiver, acquiescence or laches which does not amount to an abandon ment of his right or to an estoppel against him cannot disentitle that person from claiming relief in equity in respect of his executed and not merely executory interest.
See per Lord Chelmsford in Clarke 's case (1) at page 657.
Indeed, it has been held in The Garden Gully United Quartz Mining Company vs Hugh McLister(2) that mere laches does not disentitle the holder of shares to equitable relief against an invalid declaration of forfeiture.
Sir BarnesPeacook in delivering the judgment of the Privy Council observed at pages 56 67 as follows: There is no evidence sufficient to induce their Lordships to hold that the conduct of the plaintiff did amount to an abandonment of his shares, or of his interest therein, or estop him from averring that he continued to be the proprietor of them.
There certainly is no evidence to justify such a conclusion (1) ; 6 H.L.C. 632: (2) L. R.1 App.
39. 363 with regard to his conduct subsequent to the advertisement of the 30th of May, 1869.
In this case, as 'In that of Prendergast vs Turton(1), the plaintiff 's interest was executed.
In other words, he had a legal interest in his shares and did not require a declaration of trust or the assistance of a Court of Equity to create in him an interest in them.
Mere laches would not, therefore, disentitle him to equitable relief:, Clarke and Chapman vs Hart(2).
It was upon the ground of abandonment, and not upon that of mare laches, that Prendergast vs Turton(1) was decided.
" Two things are thus clear, namely, (1) that abandonment of right is much more than mere waiver, acquiescence or laches and is something akin to estoppel if not estoppel itself, and (2) that mere waiver, acquiescence or laches which is short of abandonment of right or estoppel does not disentitle the holder of shares who has a vested interest in the shares from challenging the validity of the purported forfeiture of those shares.
In view of the decision of the Courts below that no case of waiver, acquiescence, laches or estoppel has been established in this case it is impossible to hold that the principles deducible from the judicial decisions relied upon by the appeal Court have disentitled the Company to relief in this case.
The matter does not rest even here.
Assuming.
, but not conceding, that the principle of piercing the veil of corporate personality referred to in Smith, Stone & Knight vs The Birmingham Corporation (3) can at all be applied to the facts of the present case so as to enable the Court to impute the acts or conduct of Govindaraju Chettiar and Sundara Ayyar to the Company, we have yet to inquire whether those acts or conduct do establish such abandonment of rights as would, according to the decisions, disentitle the plaintiff from questioning the validity of the purported declaration of forfeiture.
There can be 'no question that the abandonment, if any, must be inferred from acts or conduct of the Company as such ' or, on the above principles, of its two members subsequent to (1) ; (3) (2) 6 H.L.C. 632: 10 E.R. I443.
364 the date of the forfeiture, for it is the right to challenge the forfeiture that is said to have been abandoned. 'In order to give rise to an estoppel against the Company, such acts or conduct amounting to abandonment must be anterior to the Mills ' changing its position to its detriment.
The resolution for forfeiture was passed on the 6th September, 1941.
The five thousand forfeited shares were allotted to 14 persons on the 16th November, 1941, and it is such ,allotment that made it impossible for the Mill& to give them back to the Company.
In order, therefore, to sustain a plea of abandonment of right or estoppel, it must be shown that the Company or either of its two members had done some act and/or had been guilty of some conduct between the 6th September, 1941, and the 16th November, 1941.
No such act or conduct during such period has been or can be pointed out.
On being pressed advocate for the Mills refers us to the conduct of Sundara Ayyar in opposing O.P. No. 10 'of 1942 filed by the Mills and O.P. No. 11 of 1942 by the Income tax authorities for restoring the Company to the register of companies and it is submitted that such conduct indicates that Sundara Ayyar had accepted the validity of the forfeiture.
This was long after the Mills had reallotted the forfeited shares.
Further, a perusal of paragraph 9 of the affidavit in opposition filed by Sundara Ayyar in O.P. No. 10 of 1942 will clearly show that he not only did not accept the forfeiture as valid but actually repudiated such forfeiture as wholly beyond the competence of the Board of Directors of the Mills.
The reason for opposing the restoration of the Company may well have been that Sundara Ayyar desired, at all cost, to avoid his eventual personal liability as a shareholder and director of the Company.
In any case, Sundara Ayyar did make it clear that he challenged the validity of the purported forfeiture of shares by the Mills and in this respect this case falls clearly within the decision in Clarke 's case (1) relied upon by the appeal Court.
The only other conduct of Sundara Ayyar relied on by learned advocate for the Mills in (1) ; 6 H.L.C. 632; 365 support of the appeal Court 's decision on this point is that Sundara Ayyar proceeded with his suit against Palaniappa Chettiar even after his suit as well as his appeal had been dismissed as against the Mills.
In that suit Sundara.
Ayyar sued the Mills as well as Govindaraju Chettiar and the Official Receiver of Salem representing the latter 's estate and Palaniappa Chettiar.
In the plaint itself the validity of the forfeiture was challenged.
The claim against Palani appa Chettiar was in the alternative and it was founded on the agreement of the 30th June, 1939.
The suit was dismissed as against the Mills only on the technical ground that Sundara Ayyar had no locus standi to maintain the suit.
The contention of the Company that the forfeiture was invalid and the claim for rectification of the share register of the Mills by restoring the name of the Company cannot possibly have been affected by this decision.
Sundara Ayyar 's claim against Palaniappa Chettiar was based on the agreement of 1939 and it was formulated as an alternative personal claim.
In view of the clear allegation in the plaint that the forfeiture was invalid and not binding on the Company, the continuation of the suit by Sundara Ayyar to enforce his personal claim against Palaniappa Chettiar cannot be regarded as an abandonment by Sundara Ayyar of the right of the Company.
It must not be overlooked that the Company stood dissolved on that date and Sundara Ayyar had no authority to do anything on behalf of the Company.
In our opinion there is no evidence of abandonment of the Company 's right to challenge the validity of the purported forfeiture.
The second point on which the appeal Court decided the appeal against the Company was that the form of the order made by the trial Court could not be supported as one validly made under section 38 of the Indian Companies Act.
It will be recalled that having disposed of all the points of controversy against the Mills and in favour of the Company the trial Judge had to consider the ' form of the order Which could properly be made in favour of the 366 Company.
In the summons the Company had asked for rectification of the register by restoring the name of the Company to the register in respect of 5,000 shares numbering 15048 to 20047.
It was agreed by learned advocates on both sides before the trial Court that it would, in the circumstances, be impossible to make an order for rectification with respect to those specific shares which, as already stated, had been reallotted to other persons who were not parties to the proceedings.
The Mills had also reduced its capital by having the face value of the 84,000 shares which had been issued reduced by repaying to the shareholders Rs. 5 in respect of each of those shares.
There were, however, 16,000 unissued shares of Rs. 10 each which were not affected by the reduction.
While, therefore, it was clearly impossible for the Court to direct that the Company should be replaced on the register in respect of its original shares, the Court could, under section 38, give notice to the persons to whom the shares had been reallotted or those claiming under them and make them parties to the proceedings and then make an appropriate order for ' rectification and, if necessary, also direct the Mills to pay damages under that section.
This being the situation learned advocate for the Mills had to decide upon his course of action.
What happened in Court will appear from the following extract from the judgment of the trial Court: " It is agreed by both parties that the proper order will be for the applicant Company to be placed on the register in respect of 5,000 of the unissued rupees 10 shares and I order accordingly.
In this case as the parties consent to the matter being disposed of, by allotting to the applicant unissued shares, there can, it seems to me, be no order for payment of the dividends.
Counsel for the respondent Company leaves the solution of this difficulty to me. . . . .
The suggestion of the applicant Company is that it is prepared to forego any claim to the accrued dividends if it is not required to pay interest on the outstanding call money.
This seems to me to be a very 367 reasonable suggestion. . .
I direct accordingly that on insertion of the name of the applicant Company as owner of 6,000of the unissued shares the applicant Company shall pay to the respondent company only Rs. 25,000 being the amount of calls in arrears.
" The appeal Court, however, went behind this record of the proceedings that took place before the trial Court and heard the learned senior advocate as to what had happened in Court and after hearing the senior advocate for the Mills found itself unable to agree with the contention that the learned advocate for the Mills had agreed to the substitution of 5,000 unissued shares for the shares forfeited.
No affidavit of the learned senior advocate was filed before the trial Court for the rectification of what is 'low alleged to have been wrongly recorded by the trial Judge, as suggested by the Privy Council in Madhu Sudan Chowdhri vs Musammat Chandrabati Chowdhrain (1) and other cases referred to in Timmalapalli Virabhadra Rao vs Sokalchand Chunilal & Others (2).
While we do not consider it necessary or desirable to lay down any hard and fast rule, we certainly take the view that the course suggested by the Privy Council should ordinarily be taken.
It. appears that at the time when the application was made for leave to appeal to the Federal Court an affidavit sworn by G. Vasantha Pai, the junior advocate for the Mills, was filed before the Court dealing with that application.
Paragraph 5 of that affidavit runs as follows: "During the trial every question was argued on behalf of the respondent company and no point was given up.
This will be clear from the fact that till we reached the penultimate paragraph of the judgment beginning 'It now remains to consider, etc. ' all the issues are dealt with by the learned Judge.
The agreement was on the specific form of the order on the basis of his Lordship 's judgment and without prejudice to the respondent company 's rights.
What (1) (2) 48 368 was agreed to was "Proper order" on the basis of his Lordship 's judgment which by then had been dictated.
The respondent company no more consented to the order that the appellant consented to have his application dismissed when its counsel agreed that it was impossible to make an order in terms of the Judge 's summons.
" The appeal Court understood the stand taken by the learned senior advocate as follows: " He seems to have &greed only as an alternative that if all his contentions were overruled and the learned Judge thought that notwithstanding the difficulty in the way of granting the relief for rectification the applicant company should be restored to the register, the only shares available being the 16,000 shares of Rs. 10 each unissued, the applicant company could be recognised as a shareholder in respect of 5,000 out of those shares. . . ." It is quite clear from the judgment of the trial Court, paragraph 5 of the junior advocate 's affidavit and the statement of the learned senior advocate as recorded by the appeal Court that the agreement was solely and simply as to the specific form of the order, without prejudice to the Mills ' right to challenge the correctness of the findings of the trial Court on the material issues.
In other words, all that learned advocate for the Mills desired to guard himself against was that the agreement should not preclude the Mills from preferring an appeal against the decision of the learned Judge on the merits.
The reservation was as to the right of appeal challenging the findings on the merits and the agreement was only as to the form of the order.
This limited agreement certainly implied that the Mills agreed to be bound by the order only if the Mills failed in their appeal on the merits ' In short, the consent covered only the form of the order and nothing else so that if the Mills succeeded in their appeal the order would go, although advocate has agreed to its form but that if the Mills failed in their contention as to the correctness of the findings of the learned trial Court on the 369 different questions on merits it would no longer be open to them to challenge the order only on the ground of the form of the order.
In our judgment the Mills cannot attack the form of the order to which their counsel consented.
Learned advocate for the Mills has raised the question of limitation.
He referred us to articles 48 and 49 of the Limitation Act but did not strongly press his objection founded on those articles.
We agree with the trial Court and the Court of appeal that those two articles have no application to this case.
A claim for the rectification of the register simpliciter does not necessarily involve a claim for the return of the share scrips and in this case there was, in fact, no prayer for the return of shares or the scrips and, therefore, these two articles can have no application.
Learned advocate, however, strongly relies on article 181 of the Limitation Act.
That article has, in a long series of decisions of most, if not all, of the High Courts, been held to govern only applications under the Code of Civil Procedure.
It may be that there may be divergence of opinion even within the same High Court but the preponderating view undoubtedly is that the article applies only to applications under the Code.
The following extract from the judgment of the Judicial Committee in Hansraj Gupta vs Official Liquidators, Dehra Dun Mussoorie Electric Tramway Company Limited (1) is apposite: " It is common ground that the only article in that schedule which could apply to such an application is article 181 : but a series of authorities commencing with Rai Manekbai vs Manekji Kavasji (2) have taken 'the view that article 181 only relates to applications under the Code of Civil Procedure, in which case no period of limitation has been prescribed for the application.
But even if article 181 does apply to it, the period of limitation prescribed by that article is three years from the time when the right to apply accrued, which time would be not earlier than the (1) (1933) 60 I.A. 13 at p. 20.
(2) 370 date of the winding up order, March 26, 1926.
The application of the liquidators was made on March 26, 1928, well within the three years.
The result is that from either point of view the application by the liquidators, if otherwise properly made under and within the provisions of section 186 of the Indian Companies Act, is not one which must be dismissed by reason of section 3 of the Indian Limitation Act.
It is either an application made within time, or it is an application made for which no period of limitation is prescribed.
The case may be a casus omissus.
If it be so, then it is for others than their Lordships to remedy the defect.
" Learned advocate for the Mills, however, points out that the reason for holding that article 181 was confined to applications under the Code was that the article should be construed ejusdem generis and that, as all the articles in the third division of the schedule to the Limitation Act related to applications under the Code, article 181, which Was the residuary article, must be limited to applications under the Code.
That reasoning, it is pointed out, is no longer applicable because of the amendment of the Limitation Act by the introduction of the present articles 158 and 178.
These articles are in the third division which governs applications but they do not relate to applications under the Code but to one under the Arbitration Act and, therefore, the old reasoning can no longer hold good.
It is urged that it was precisely in view of this altered circumstance that in Asmatali Sharif vs Mujahar Ali Sardar(1) a Special Bench of the Calcutta High Court expressed the opinion that an application for pre emption by a non notified co sharer should be governed by article 181 of the Limitation Act.
A perusal of that case, however, will show that the Special Bench did not finally decide that question in that case.
In Hurdutrai Jagadish Prasad vs Official Assignee of Calcutta(2) a Division Bench of the Calcutta High Court consisting of Chief Justice Harries and Mr. Justice Mukherjea who had delivered (1) (2) 371 the judgment of the Special Bench clearly expressed the view that article 181 of, the Limitation Act applied only to applications under the Civil Procedure Code and did not apply to an application under section 56 of the Presidency Towns Insolvency Act Mukherjea J. who also delivered the judgment of the Division Bench explained the observations made by him in the Special Bench case by pointing out that the entire procedure for an application under section 26 (F) of the Bengal Tenancy Act was regulated by the Civil Procedure Code and, therefore, an application for pre emption was, as it were, an application made under the Civil Procedure Code.
Subsequently in Sarvamangala Dasi vs Paritosh Kumar Das(1) G.N. Das J. who was also a member of the Special Bench in the first ' mentioned case expressed the opinion, while sitting singly, that article 181 was not confined to applications under the Code.
His Lordship 's attention does not appear to have been drawn to the case of Hurdutrai Tagadish Prasad(2).
It does not appear to us quite convincing, without further argument, that the mere amendment of articles 158 and 178 can ipso facto alter the meaning which, as a result of a long series of judicial decisions of the different High Courts in India, came to be attached to the language used in article 181.
This long catena of decisions may well be said to have, as it were, added the words " under the Code " in the first column of that article.
If those words had actually been used in that column then a subsequent amendment of articles 158 and 178 certainly would not have affected the meaning of that article.
If, however, as a result of judicial construction, those words have come to be read into the first column as if those words actually occurred therein.
we are not of opinion, as at present advised, that the subsequent amendment of articles 158 and 178 must necessarily and automatically have the effect of altering the long acquired meaning of article 181 on the sole and simple ground that after the amendment the reason on which the old construction was founded is no longer available.
We need (1) A.I.R. 1952 Cal. 689.
(2) 372 not, however, on this occasion, pursue the matter further, for we are of the,opinion that even if article 181 does apply to the present application it may still be said to be within time.
The period of limitation prescribed by that article is three years from the time when the right to apply accrues.
" It is true that a further notice after the shares are forfeited, is not necessary to complete the forfeiture of the shares See Knight 's case(1)], but it is difficult to see how a person whose share is forfeited and whose name is struck out from the register can apply for rectification of the register until he comes to know of the forfeiture.
The same terminus a quo is also prescribed in Article 120 of the Limitation Act.
In O.R.M.O. M.SP.
(Firm) vs Nagappa Chettiar(2) which was a suit to recover trust property from a person who had taken it, with notice of the trust, by a transaction which was a breach of trust, the Privy Council approved and applied the principles of the earlier Indian decisions referred to therein to the case before them and held that the time began to run under article 120 after the plaintiff came to know of the transaction which gave him the right to sue.
On the same reasoning we are prepared to extend that principle to the present application under article 181.
If article 181 applies then time began to run after the Company came to know of its right to sue.
It is not alleged that the Company had any knowledge of the forfeiture between the 5th September, 1941, when the resolution of forfeiture was passed and the 9th September, 1941, when the Company became defunct.
After the last mentioned date and up to the 16th February, 1945, the Company stood dissolved and no knowledge or notice can be imputed to the Company during this period.
Therefore, the Company must be deemed to have come to know of its cause of action after it came to life again and the present application was certainly made well within three years after that event happened on the 16th February, 1945.
If article 181 does not apply then the only article that can (1) (2) I.L.R. 373 apply by analogy is article 120 and the application is also within time.
In either view this application cannot be thrown out as barred by limitation.
The result, therefore, is that this appeal must succeed.
We set aside the judgment and decree of the High Court in appeal and restore the order of the trial Court.
The appellant will be entitled to the costs of the appeal in the High Court as well as in this Court.
BOSE J. I agree with the conclusions of my learned brothers and also with their reasoning generally but lest it be inferred that I am assenting to a far wider proposition than is actually the case, I deem it advisable to clarify my position about abandonment and waiver.
Though the usage of these words in cases of the present kind has the sanction of high authority, they are, in my opinion, inapt and mislead ing in this class of case.
In order to appreciate this it will be necessary to hark back to first principles.
In the first place, waiver and abandonment are in their primary context unilateral acts.
Waiver is the intentional relinquishment of a right or privilege.
Abandonment is the voluntary giving up of one 's rights and privileges or interest in property with the intention of never claiming them again.
But except where statutory or other limitations intervene, unilateral acts never in themselves effect a change in legal status because it is fundamental that a man cannot by his unilateral action affect the rights and interests of another except on the basis of statutory or other authority.
Rights and obligations are normally inter twined and a man cannot by abandonment per se of his rights and interests thereby rid himself of his own obligations or impose them on another.
Thus, there can be no abandonment of a tenancy except on statutory grounds (as, for example, in the Central Provinces Tenancy Act, 1920) unless there is acceptance, express or implied, by the other side.
It may, for example in a case of tenancy, be to the landlord 's interest to keep the tenancy alive and so also in the case 374 of shares of a company.
It may be to the interests of the company and the general body of shareholders to refrain from forfeiture if, for example, the value of unpaid calls exceeds the market value of the shares.
Such a position was envisaged in Garden Gully United Quartz Mining Co. vs Hugh McLister(1).
So also with waiver.
A long catena of illustrative cases will be found collected in B. B. Mitra 's Indian Limitation Act, Thirteenth Edition, pages 447 and 448.
This fundamental concept brings about another repercussion.
Unless other circumstances intervene, there is a locus paenitentiae in which a unilateral abandonment or waiver can be recalled.
It would be otherwise if the unilateral act of abandonment in itself, and without the supervention of other matters, effected a change in legal status.
In point of fact, it is otherwise when, as in the statutory example I have quoted, the law intervenes and determines the tenancy.
It is, therefore, in my opinion, fundamental that abandonment and waiver do not in themselves unilaterally bring about a change in legal status.
Something else must intervene, either a statutory mandate or an act of acceptance, express or implied, by another person, or, as Lord Chelmsford put it in Clarke & Chapman vs Hart(1), acts which are equivalent to an agreement or a licence, or an estoppel in cases where an estoppel can be raised.
Next, there is, in my view, a fundamental difference between an executory interest and an executed one.
In the former, it is necessary to resort to equitable reliefs to get enforced a right which is not at the date a vested right: cases of specific performance and declaration of a trust are examples, so also a prayer for relief from forfeiture.
In cases of this kind, conduct which would disentitle a person to equitable relief is relevant.
No hard and fast rule can or should be laid down as to what such conduct should consist of but among the varieties of conduct which Courts have considered sufficient in this class of case is conduct which amounts to laches (1) at 57 (2) (1858) 10 E.R. 1443 at 1452 and 1453.
375 or where there has been a standing by or acquiescence or waiver or abandonment of a right, particularly when this would prejudicially affect third parties.
This sort of distinction is brought out by Lord Chelmsford in Clarke & Chapman vs Hart(1).
The position is different when the interest is executed and the man has a vested interest in the right, that is to say, when he is the legal owner of the shares with the legal title to them residing in him.
This legal title can only be destroyed in certain specified ways.
It is in my view fundamental that the legal title to property, whether moveable or immoveable, cannot pass from one person to another except in legally recognised ways, and normally by the observance of certain recognised forms.
Confining myself to the present case, one of the ways in which the title to shares can pass is by forfeiture; but in that case an exact procedure has to be followed.
A second way is by transfer which imports agreement.
There again there is a regular form of procedure which must be gone through.
A third is by estoppel, though, when the position is analysed, it will be found that it is not the estoppel as such which brings about the change.
The expressions abandonment, waiver and so forth, when used in a case like the present, are only synonyms for estoppel and despite hallowed usage to the contrary, I prefer to call a spade a spade and put the matter in its proper legal pigeon hole and call it by its proper legal name.
These other terms are, in my view, loose and inaccurate and tend to confuse, when applied to cases of the present nature.
A man who has a vested interest and in whom the legal title lies does not, and cannot, lose that title by mere laches, or mere standing by or even by saying that he has abandoned his right, unless there is something more, namely inducing another party by his words or conduct to believe the truth of that statement and to act upon it to his detriment, that is to say, unless there is an estoppel, pure and simple.
It is only in such a case that the right can (1) ; at 1452 and 1453.
376 be lost by what is loosely called abandonment or waiver, but even then it is not the abandonment or waiver as such which deprives him of his title but the estoppel which prevents him from asserting that his interest in the shares has not been legally extinguished, that is to say, which prevents him from asserting that the legal forms which in law bring about the extinguishment of his interest and pass the title which resides in him to another, were not duly observed.
Fazl Ali J. and I endeavoured to explain this in Dhiyan Singh vs Jugal Kishore (1).
What happens is this.
The person estopped is not allowed to deny the existence of facts, namely the actings of the parties and so forth which would in law bring about the change in legal status, namely the extinguishment of his own title and the transfer of it to another, for estoppel is no more than a rule of evidence which prevents a man from challenging the existence or non existence of a fact.
Once the facts are ascertained, or by a fiction of law are deemed to exist, then it is those facts which bring about the alteration in legal status; it is not the estoppel as such nor is it the abandonment or waiver per se.
I prefer therefore to adhere to what I conceive is the proper legal nomenclature.
As I understand it, estoppel was the basis of the decision in Clarke & Chapman vs Hart (2).
See Lord Wensleydale 's judgment at page 1458 and the Lord Chancellor 's at page 1453 ; so also.
in Garden Gully United Quartz Mining Company vs Hugh McLister (3).
That there is no sufficient ground for estoppel in this case is shown by the facts set out in the judgment of my learned brothers.
I agree that the appeal must succeed.
Appeal allowed.
(1) [1952] S.C.R. 478 at 485.
(3) 1 App.
| A private limited company of which G and S were the only two members owned 5,000 shares in a Mill.
The company did not pay the calls and the 5,000 shares held by them were forfeited on the 5th September, 1941, and re allotted to other persons on the 16th November.
Notice of the forfeiture was sent to the company on the 10th September but this was returned undelivered.
In the meantime the company was struck off the Register under section 247 of the Companies Act with effect from 9th September.
On the application of S the company was restored to the Register and an Official Receiver was appointed on 16th February, 1945, to wind it up.
On the 5th March, 1946, the Official Receiver took out a summons calling upon all parties to show cause why the share register of the Mills should not be rectified by restoring the name of the company to the register in respect of the 5,000 shares, as the forfeiture thereof was invalid.
The trial Judge held that the forfeiture was invalid for want of sufficient notice, that the plea of estoppel, acquiescence and laches raised by the Mills was untenable, and that the application as governed by article 120 of the Limitation Act and was not time barred, and ordered that, as the advocates had agreed to such a course, 5,000 new shares may be issued to the company.
The High Court on appeal found that the forfeiture was invalid, that the application was not time barred and that no acquiescence, waiver or estoppel had been established, but held that the company had, by the conduct of G and S and the long delay in reviving the company, abandoned its right to challenge the forfeiture and that there was also no legal basis on which the order passed by the trial Judge could be supported.
On further appeal: Held, (i) if the facts on record were insufficient to sustain a plea of waiver, acquiescence or estoppel as held by both the lower Courts, a plea of abandonment of right which is an aggravated form of waiver, acquiescence or laches and akin to estoppel cannot be sustained on the same facts.
46 352 (ii) Whatever be the effect of mere waiver, acquiescence or laches on the part of a person on his claim to equitable remedy to enforce his rights under an executory contract, mere waiver, acquiescence or laches which does, not amount to an abandonment of his right or to an estoppel against him, cannot disentitle that person from claiming relief in equity in respect of his executed interests.
Prendergast vs Turton ([18411 ; , Clarke and Chapman vs Hart ([1858] 6 H.L.C. 632), Jones vs North Vancouver Land and Improvement Co. ([1910] A.C. 317) explained.
Garden Gully United Quartz Mining Company vs Hugh Mclister ([1875] 1 App.
Cas. 39) relied on.
(iii) There was no evidence in the case of any conduct on the part of S or G subsequent to the date of forfeiture and anterior to the Mills changing its position to its detriment, upon which a plea of abandonment of the right to challenge the forfeiture could be based.
Smith, Stone and Knight vs Birmingham Corporation ([1939] 4 All E.R. 116) distinguished.
(iv) On a proper construction of the statements made by the counsel, the form of the order to which the counsel had agreed could not be challenged by the Mills.
(v) The application was not governed by articles 48 or 49 of the Limitation Act as a claim for rectification of the register simpliciter does not necessarily involve a claim for the return of the share scrips and there was no prayer in the ease for return of the scrips.
(vi) Article 181 applies only to applications under the Civil Procedure Code, and even if the said article was applicable, time began to run under the article only from the date on which the company knew of the forfeiture of the shares; and as the company bad no knowledge until 9th September, 1941, when it became defunct, and the company came to life again only on 16th February, 1945, knowledge could not be imputed to the company before the latter date and the application was therefore not barred under article 181.
(vii) If article 181 does not apply the only article that could apply was article 120 and even under that article the application was not barred.
Hansraj Gupta vs Official Liquidators, Dehra Dun, Mussoorie Electric Tramway Co. ([1933] 60 I.A. 13), Hurdutrai Jagdish Prasad vs Official Assignee of Calcutta ([1948] 52 C.W.N. 343) approved.
Asmatali Sharif vs Mujahar Ali Sardar ([1948] and Sarvamangal Dasi vs Paritosh Kumar Das (A.I.R. doubted.
BOSE J. Waiver and abandonment are in their primary con text unilateral sets and except where statutory or other limitations intervene unilateral acts in themselves cannot effect a change in legal status.
Consequently it is fundamental that 353 abandonment and waiver cannot unilaterally bring about a change in legal status in the absence of either a statutory mandate or an act of acceptance, express or implied by another person.
There is also a fundamental difference between executed and executory interests in this connection.
A man who has a vested interest and in whom the legal title lies does hot, and cannot, lose that title by mere laches, or mere standing by or even by saying that he has abandoned his right, unless there is something more, namely inducing another party by his words or conduct to believe the truth of that statement and to act upon it to his detriment, that is to say, unless there is an estoppel, pure and simple.
It is only in such a case that the right can be lost by what is loosely called abandonment or waiver, but even then it is not the aban donment or waiver as such which deprives him of his title but the estoppel which prevents him from asserting that his interest in the shares has not been legally extinguished, that is to say, which prevents him from asserting that the legal forms which in law bring about the extinguishment of his interest and pass the title which resides in him to another, were not duly observed.
|
Appeal No. 172 of 1952.
Appeal by special leave from the Judgment and Decree dated January 25, 1952, of the High Court of Judicature at Bombay (Chagla C.J.) in Revision Application No. 1119 of 1951 from the Judgment and Decree dated August 10, 1951, of the Court of Small Causes at Bombay in Appeal No. 355 of 1950, arising out of Judgment and Decree dated 227 December 18, 1950, of the Court of Small Causes in Suit No. 1055/7943 of 1948.
B. H. Lulla for the appellants.
C. H. Daphtary (Solicitor General for India) (B.B. Adhyarujina, with him) for the respondents Nos. 1, 2 and 3. 1952.
December 10.
The Judgment of the Court was delivered by DAS J.
This is an appeal by special leave from the judgment and order of the High Court of Judicature at Bombay passed on January 25, 1952, in Civil Revision, Application No. 1119 of 1951.
It arises out of a suit filed in the Bombay Small Causes Court under section 28 of the Bombay Rents, ' Hotel and Lodging House Rates Control Act, 1947, for ejectment from and compensation at the rate of Rs. 370 per month from November 1, 1947, for the use and occupation of the second floor flat of Sunama House situate in Cumballa Hill, Bombay.
The plaintiffs are the trustees of the will of Framroze D. B. Taraporewala deceased and as such the owners of the Sunama House.
The defendants are two in number, namely, the first defendant Mrs. Dinbai K. Lala to whom the said flat was let out by the plaintiffs on or about September 1, 1942, at Rs. 370 per mouth and the second defendant a limited company to whom the first defendant had sublet the said flat as from November 16, 1947, at the same rent.
The defendants contested the suit on a variety of grounds, but the trial Court by its judgment dated October 18, 1950, rejected all the pleas and passed a decree directing both the defendants to vacate the flat by March 31, 1951, and awarding, only as against the first defendant, Rs. 3,317 10 8 for compensation from November 1, 1947, till July 31, 1948, and thereafter at Rs. 370 per month from August 4, 1948, till delivery of possession besides the costs of the suit.
The defendants preferred an appeal under section 29 of that Apt.
Besides the various pleas put forward 228 before the trial Court, the defendants, before the Appellate Bench, put forward an additional plea, watch was not pleaded in their written statements, namely, that the Small Causes Court had no jurisdiction to entertain the suit in so far as it concerned the second defendant.
The Appellate Bench of the Small Causes Court dismissed the appeal with costs.
The second defendant thereafter moved the High Court in revision under section 115 of the Code of Civil Procedure which was also dismissed with costs.
The second defendant has now come up in appeal before us after having obtained special leave of this Court.
The only contention urged before us is that the Small Causes Court had no jurisdiction to entertain this suit.
The relevant portions of section 28 of the Act are as follows: "Notwithstanding anything contained in any law and notwithstanding that, by Reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be with in its jurisdiction, (a) in Greater Bombay, the Court of Small Causes, Bombay, (aa). . . . . . (b). . . . . . . shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this Part apply, and to decide any application made under this Act and to deal with ' any claim or question arising out of this Act or any of its provisions ; and no other Court shall have jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question.
" It was not disputed that the provisions of Part II of the Act apply to the premises.
The contention of the appellant is that the suit as against it was not a suit between a landlord and a tenant and that, in so 229 far as it claimed compensation for use and occupation, it was not a suit for recovery of rent and, therefore, section 28 had no application, and the Court of Small Causes had no jurisdiction to entertain this suit.
In view of this plea it is necessary to refer to the plaint in this suit.
After setting forth their title as owners of the Sunama Houses trustees under the will of Framroze D. B. Taraporewala the plaintiffs plead that the second floor flat was let out to first defendant on or about September 1, 1942, at Rs. 370 per month on terms and conditions printed on the back Of the rent bill form which were shown to and accepted by the first defendant.
In paragraph 5 of the plaint is set out one of those terms, namely, that the tenant shall not assign, sublet or re let the premises without the previous written consent of the landlords.
In paragraph 7 reference is made to the notice given by the plaintiffs to the first defendant on October 17, 1946, to vacate the flat at the end of November, 1946, on the ground that the same was required reasonably and bonafide for the use of two of the beneficiaries under the will.
Then, after referring to an unsuccessful attempt on the part of the plaintiffs to obtain a certificate under section 9 of the Act ' the plaintiffs refer to a letter dated November 16, 1947, written by the first defendant to the plaintiff8 intimating that she had from that day sublet the flat to the second defendant.
It is stated in para,graphs 12 and 13 of the plaint that on December 19, 1947, the second defendant sent a cheque for Rs. 370 for rent , for the month of November, 1947, but the plaintiffs declined to accept the same or to recognise the second defendant as a lawful occupant as subtenant or otherwise.
It is also alleged that on January 23, 1948, the plaintiffs gave a notice to both ,the Codefendants to vacate the premises at the end of February 29, 1948.
In paragraphs 14 and 15 the plaintiffs formulate the grounds for ejectment, ,namely, (1) that the alleged subletting by the first ,defendant to the second defendant was wrongful, illegal and in breach of the terms of the tenancy and 30 230 (2)that the plaintiffs required the premises reasonably and bona fide for the use and occupation of two of the beneficiaries.
The plaintiffs prayed that both the defendants be ordered to vacate the premises and that both of them be ordered to pay to the plaintiffs compensation for the use and occupation of the premises at Rs. 370 per mouth from November 1, 1947, till delivery of vacant possession.
The appellant points out that on the face of the plaint the plaintiffs declined to recognise it as a lawful occupant as subtenant or otherwise and treated it as a mere trespasser having no lawful claim to the demised flat and, therefore, the suit, in so far as it was one between the plaintiffs and the appellant (the second defendant), cannot be said to be a suit between a landlord and a tenant and that the suit in so far as it claimed compensation from him cannot be said to be a suit for recovery of rent.
The last part of the contention need not detain us long, for the suit was undoubtedly one for possession of the flat and the claim for compensation was only incidental and ancillary to to the claim for possession.
Jurisdiction to entertain a suit for possession will empower the Court not only to pass a decree for possession but also to give directions for payment of mesne profits until delivery of possession.
Such direction for payment of mesne profits is usually an integral part of the decree for possession.
The only question for consideration, therefore, is whether the suit was one between a landlord and a tenant.
The respondents (the plaintiffs) do not contend that the appellant (the second defendant) is a 'tenant" as defined in section 5 (11) of the Act.
The appellant, on the other hand, does not and, indeed, cannot ;deny that, as between the plaintiffs and the first defendant, the suit is one between a landlord and a tenant and as such the Small Causes Court is, under section 28 of the Act, the only Court competent to entertain the suit.
Section 28 confers jurisdiction on the Court of Small Causes not only to entertain and try any suit or proceeding between a landlord and a 231 tenant relating to the recovery of rent or possession of the premises but also "to deal with any claim or question arising out of this Act or any of its provisions.
There is no reason to hold that ' "any claim or question" must necessarily be one between the landlord and the tenant.
In any case, once there is a suit between a landlord and a tenant relating to the recovery of rent or possession of the premises the Small Causes Court acquires the jurisdiction not only to entertain that suit but also "to deal with any claim or question arising out of the Act or any of its pro visions" which may properly be raised in such a suit.
The plaintiffs in this suit claimed that the purported subletting by the first defendant to the second defendant was unlawful both because it was a breach of the terms of the tenancy and also because as the statutory tenant after the determination of the contractual tenancy the first defendant was not entitled to create a sub tenancy and they questioned the validity of the second defendant 's claim to any protection under the Act.
The claim or question as to the respective rights of the plaintiffs and the second defendant thus raised in the plaint certaintly arises out of the Act and the language of section 28 appears to be wide enough to cover the same.
Apart from that section, under the ordinary law a decree for possession passed against a tenant in a suit for ejectment is binding on a person claiming title under or through that tenant and is executable against such person whether or not he was or was not a party to the suit.
The non joinder of such a person does not render the decree any the less binding on him.
It is in this sense, therefore, that he is not a necessary party to an ejectment suit against the tenant.
It is, however, recognised that such a person is, nevertheless, a proper party to the suit in order that the question whether the lease has been properly determined and the landlord plaintiff is entitled to recover possession of the premises may be decided in his presence so that he may have the opportunity to see that there is no collusion between the landlord 232 and the tenant under or through whom he claims and to seek protection under the Act, if he is entitled to ' any.
Such a person may be joined as a party to the suit from the beginning of the suit or at any later stage of the suit if the Court thinks fit to do so.
The joinder of such a proper party cannot alter the character of the suit and does not make the suit any the less a suit between the landlord and the tenant or take it out of section 28 of the Act.
To hold otherwise will be to encourage multiplicity of suits which will result in no end of inconvenience and confusion.
In our view the decision and the reasoning of Chagla C.J. are substantially correct and this appeal must fail.
We, therefore, dismiss the appeal with costs.
Appeal dismissed.
Agent for respondents Nos. 1, 2 & 3: B. A. Gagrat.
| Where a lease of a flat situated within the City of Bombay contained a term that the tenant shall not assign, sub let or re let the premises, without the previous consent of the landlord and the tenant, in contravention of this term sub let the flat, and the landlord instituted a suit against him and the sub tenant in the Court of Small Causes Bombay, for possession and compensation for use and occupation of the premises, and the sub lessee contended that the Court of Small Causes had no jurisdiction so far as he was concerned inasmuch as the suit was not one between a landlord and a tenant nor, one for rent within section 28 of the Bombay Rents, Hotel and Lodging Rates Control Act, 1947: Hold, (i) that the suit was clearly one for possession and the claim for compensation wag merely an incidental claim; (ii) section 28 of the Act conferred jurisdiction on the Court of Small Causes not only to entertain and try any suit or proceeding between a landlord and tenant for recovery of rent or possession, but also "to deal with any claim or question arising out of this Act or 'any of its provisions" ' and section 28 was thus wide enough to cover the question raised as between the plaintiff and the sub lessee ; (iii) in any event, though the sub lessee was not a necessary party to the suit he was a proper party, and the joinder of such a party cannot alter the nature of the suit and make it any the less a suit between a landlord and tenant or take it out of section 28.
|
ON: Cases Nos. 11 and 12 of 1950.
Appeals under article 132 (1) of the Constitution of India from the Judgment and Order dated April 5, 1950, of the High Court of Judicature for the State of Punjab at Simla (Khosla J.) in Criminal Revision Nos, 1144 and 1147 of 1949.
Achhru Ram (Gopal Singh, with him) for the appellant in Case No. 11.
H. J. Umrigar for the appellant in Case No. 12.
section M. Sikri (Advocate General of Punjab) (H. section Gujral, with him) for the respondent, the State of Punjab.
M. C. Setalvad (Attorney General for India) (B. Sen, with him) for the Intervener. 1952.
December 5.
The Judgment of the Court was delivered by MUKHERJEA J.
The facts giving rise to these two connected appeals may be briefly narrated as follows: Darshan Singh, the appellant in Case No. 1 1, and Attar Singh who is the appellant in Case No. 12, along with three other persons were tried by the Special Magistrate, Ambala, East Punjab, on charges under section 120 B of the Indian Penal Code, read with section 3/10 of the East Punjab Cotton Cloth and Yarn (Regulation of ' Movement) Order, 1947, and section 7 of the Essential Supplies Act, 1946.
There wets a further charge under section, 8 of the Essential Supplies Act against three of these accused, Darshan Singh begning on of them.
321 The allegation against all the accused, in substance, was that they conspired to export 76 bags of mill made cloth to Pakistan without a permit, by smuggling them through the customs barrier near Wagha, on the morning of the 26th ,May, 1948.
Wagha is., about 18 miles from Amritsar, and at a distance of nearly half a mile from this place lies the actual Indo Pakistan border.
Between the customs barrier and the border there is a small Police Post and almost opposite the Police Post is the customs office which is located in a tent.
The prosecution case ' is that at about 7 a. m. on the 26th of May, 1948, a truck, loaded with a large quantity of millmade cloth owned by the accused Ram Singh, arrived at the customs barrier near Wagha.
Rajendra Singh, another accused, who was on duty at that time as the Customs Supervisor, allowed the truck to pass through and the truck stopped near the customs office on the side of the Police Post.
As soon as the truck stopped, Darshan Singh, who was the Deputy Superintendent in charge of the customs barrier, and Attar Singh, who was a Customs Preventive Officer at Amritsar and was then under order of transfer to some other place, went to the Police Station and asked Kulraj, the Sub Inspector in charge of the same, to allow the lorry to pass through upto the border.
Kulraj did not accede to this request and thereupon both Darshan Singh and Attar Singh went back to the customs tent.
The truck was then unloaded and the goods were handed over to a large number of coolies who began carrying them towards the border, being followed by both Attar Singh and Ram Singh.
A little later, Kailash Chandra, a Police Sub Inspector of Amritsar who was at that time on special duty in connection with checking and detec tion of smuggling cases, arrived at the place on a motor bicycle and being informed by Kulraj of what had happened before, both he and Kulraj proceeded in his motor cycle towards the border and overtook the coolies who were carrying the goods.
The coolies were rounded up and brought back to the border along 322 with Attar Singh, though Ram Singh managed to Slip away.
Kailash Chandra made a report of the occurrence to Inder Singh, who was the head of the Special Police Establishment at Delhi dealing with smuggling cases, and after a detailed investigation, the five accused were sent up to take their trial.
The trying Magistrate convicted all of them under section 120 B of the Indian Penal Code, read with section 3/10 of the East 'Punjab Cotton Cloth and Yarn Order, 1947, and sentenced them to rigorous imprisonment for a period of one year each.
Attar Singh was further convicted under section 7 of the Essential Supplies Act and Darshan Singh under section 8 of the said Act, and there was a sentence of one year 's rigorous imprisonment and a fine of Rs. 1,000 upon each one of them under these sections, the sentence of rigorous imprisonment to run concurrently with that on the previous charges.
Against this judgment there was an appeal taken by all the accused to the Court of the Sessions Judge at Amritsar.
The Additional Sessions Judge, who heard the appeal, acquitted two of the accused but maintained the conviction of the other three, namely, Attar Singh, Ram Singh and Darshan Singh, though their sentences were reduced.
Thereupon these three persons presented three separate revision petitions to the High Court of East Punjab at Simla which were heard and disposed of by Mr. Justice Khosla sitting singly.
The learned Judge dismissed the revision petitions but granted a certificate under article 132 of the Constitution on the ground that the cases involved a substantial question of low as to the interpretation of the Constitution.
It is on the strength of this certificate that these two appeals have come before us, one being filed by Darshan Singh and the other by Attar Singh.
No appeal has been preferred by the accused Ram Singh.
The constitutional point involved in these appeals has been presented before us very lucidly by Mr. Achhru Ram who appeared on behalf of Darslian 323 Singh, the appellant in Case No. II, and his contention, in substance, is that the East Punjab Cotton Cloth and Yarn Order, 1947, which was promulgated by the Governor of East Punjab by notification dated 15th November, 1647, and under the provisions of which the prosecution was launched against the accused, was ultra vires the authority of the Governor, in so far as it purported to legislate on matters of export and import across the customs frontier, and consequently the accused could not be held guilty of any offence for having violated such provisions.
For a proper appreciation of raised by the learned counsel, it would be necessary to refer to certain provisions of the Government of India Act, 1935, as well as to those of a number of later enactments.
Under entries 27 and 29 of List II of the Government of India Act, 1935, " trade and commerce within the province " and " produc tion. supply and distribution of goods " were provincial subjects, while " import and export across the customs frontier " was a central subject being covered by item 19 in List I. Section 102 of the Government of India Act, 1935, gave the Central Legislature the power to legislate on provincial subjects if and when a proclamation was issued by the Governor General that a state of emergency existed in the country, and such legislation would, under sub section (4) 'of the section, cease to have effect on the expiration of a. period of ' six months after the proclamation had ceased to operate.
It appears that these extraordinary powers were assumed by the Central Legislature during the period of the last war when there was a Proclamation of Emergency by the Governor General, and the Defence of India Rules promulgated during this period dealt with various ' provincial matters.
The Proclamation of Emergency was revoked by the Governor General under section 102, clause (3), of the Constitution Act on 1st April, 1946, and the result of the revocation was that all orders passed on the basis of the Defence of India Act or the Defence of India Rules ceased to be 42 324 operative after the 30th of September, 1946.
The (state of the country, however, was at that time far from normal and it was considered necessary that the control of the Central Legislature over the production, supply and distribution of goods should not be discontinued.
To meet this situation, the British Parliament passed a temporary Act (9 and 10 Geo.
6 chapter 39) which gave the Indian Legislature, during the period specified in the Act, the power to make laws with regard to certain provincial subjects.
The provision of section 2 of the Act, so far as is necessary for our present purpose, stood as follows: "(1) Notwithstanding anything in the Government of India Act, 1935, the Indian Legislature shall, during the period mentioned in section 4 of this Act, have power to make laws with respect to the following matters: (a)trade and commerce (whether or not within a Province) in and the production, supply and distribution of, cotton and woollen textiles, paper, petroleum products, spare parts of mechanically propelled vehicles, coal, iron, steel and mica; ".
Armed with this authority, the Indian Legislature passed the Essential Supplies (Temporary Powers) Act of 1946, sections 3 and 4 of which are in these terms: " 3.
The Central Government so far as it appears to it necessary or expedient for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices may, by notified order provide for regulating and prohibiting the production, supply and distribution thereof and trade and commerce therein.
* * * * 4.The Central Government may by notified order direct that the power to make orders under section 3 shall in relation to such matters and subject to such conditions,, if any, as may be specified in the direction, be exercisable also by 326 (a) * * * * (b)such Provincial Government or such officer or authority subordinate to a Provincial Government as may be specified in the direction.
" By a notification dated 20th of December, 1946, issued under section 4 mentioned above, the Central Government delegated to the Governor of Punjab the powers under section 3 of the Act.
On the 15th of November, 1947, the Governor of East Punjab, in exercise of the powers delegated by the said notification, passed the East Punjab Cotton Cloth and Yarn (Regulation of Movement) Order, 1947, and sections 2, 3 and 10 of the Order are material for our present purpose.
Section 2 is in these terms: "In this Order unless there is anything repugnant in the subject or context, (a) " export " means to take out of the Province of the East Punjab or the said land by rail, road or river to any Province or State of the Dominions of India and Pakistan and includes taking out of the Province of East Punjab to any place, situated in the said lands as well as out of the said lands to any place situated in the East Punjab.
" Section 3 runs as follows: " No person shall export or attempt to export cotton cloth or yarn except under the authority and in accordance with the conditions of a permit, issued by a permit issuing authority. .
The permit shall be in form IV, specified in Schedule 'A ' annexed to this Order ".
Section 10 provides: "If any person contravenes any provision of this Order, he shall be punishable with imprisonment which may extend to 3 years, with fine or both and without prejudice to any other general punishment which may be imposed by any court trying such contravention may direct that any cotton cloth and/,or yarn in respect of which the court is satisfied that this order, has been contravened together with the 326 covering and packing of such cloth shall be forfeited to His Majesty.
" The point for our consideration is, whether the above provisions which prohibit inter alia the export of certain essential commodities to any country outside India without a permit and make the violation of such provisions an offence, were validly made by the Governor in exercise of the powers delegated to him under section 4 of the Essential Supplies (Temporary Powers) Act 1946 ? It is not suggested by the learned counsel that there was anything improper in the Central Government 's delegating its powers to the Governor of East Punjab under section 4 of the Essential Supplies (Temporary Powers) Act.
His contention is that the Governor, in making the order, acted in excess of is delegated authority by prohibiting the export of cotton cloth and yarn to any I place outside India.
Matters of export and import, it is said, were not within the scope of section 3 of the Essential Supplies and :the notification tinder section 4 could only delegate to the Governor such powers as the Central Government could itself 'exercise under section 3.
Section 3 of the Essential Supplies Act, it is true, authorised the Central Government to make provisions for regulating and prohibiting the production, supply and distribution of the essential commodities specified in the Act and also trade and commerce therein; but it is argued by the learned counsel that the expression, " trade and commerce ", as used in the section, must be taken to mean trade and commerce within a province or at the most between provinces inter se, but it cannot include any transaction by way of exporting goods outside India.
This interpretation, somewhat restricted as it appears to us, is sought to be supported by a two fold argument.
In the first Place, it, is said, that the Essential Supplies Act, as its, Preamble shows, was passed by the Central Legislature in exercise of the authority conferred upon it by the India (Central Government and Legislature) Act, 1946, (9 and, 10 Geo.
6, c. 39) and that statute 327 conferred, only for a short period of time, a, power in the Central Indian.
Legislature to legislate on certain provincial matters, which it could not do after the revocation of the Proclamation of Emergency on the termination of the war.
It is said, therefore, that the Essential Supplies Act purported to deal exclusively with provincial matters, and import and export of goods outside the Indian territory, being a central subject, could not reasonably be brought within the purview of the Act.
The other line of reasoning that is put forward in support of the argument is, that the intention of the Central Legis lature not to include export and import within the provisions of the Essential Supplies Act is evidenced by the fact, that the Central Legislature dealt with export and import of goods separately, and by an, altogether different set of enactments which exist side by side with the Essential Supplies Act and other legislation of the same type preceding it.
It is pointed out that there was an order made under the Defence of India Rules on 3rd November, 1945, (being Order No. 91 c. w. (1) 45) imposing prohibitions on export of various descriptions of goods specified therein.
The Defence of India Rules were due to expire on the 30th September, 1946.
On the 26th September, 1946, the Essential Supplies Ordinance was passed and this was later replaced by the Essential Supplies Act.
On the very day that this Ordinance ,was passed, another Ordinance, being Ordinance No. XX of 1946, was promulgated, which inter alia continued the provisions of the Defence of India Rules relating to prohibition and restriction of import and export of goods.
Subsequently on the 26th of March, 1947, the Im ports and Exports (Control) Act was passed, which dealt comprehensively with the subject of control over exports and imports.
As it would be unnatural to suppose that the legislature was legislating on the same subject simultaneously by two parallel sets of legislation existing side by side, it is argued that export and import of goods were not within the scope and intendment of the Essential Supplies Act.
328 These arguments though somewhat plausible at first sight, do not appear to us to be sound or convincing.
It is a cardinal rule of interpretation that the language used by the legislature is the true depository of the legislative intent, and that words and phrases occurring in a statute are to be taken not in an isolated or detached manner dissociated from the context, but are to be read together and construed in the light of the purpose and object of the Act itself.
The object of the Essential Supplies Act, as set out in the preamble, was to provide for the continuance, during a limited period of time, of the power to control the production, supply and distribution of, and trade and commerce in, foodstuffs, cotton and woollen textiles, petroleum, iron and other essential commodities, a list of which appeared in the Act itself.
Section 3, which is the most material part of the Act,, authorised the Central Government, whenever it considered expedient or necessary, for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, to provide by notified order, for regulating or prohibiting, the production, supply and distribution thereof or trade and commerce therein.
Keeping this object in view and reading the words" trade and commerce " in the light of the context, there appears to be no reason why these words should not be taken in their ordinary or natural sense and why restriction on the export of goods to any place outside a province, including a neighbouring foreign State should be deemed to be outside their scope and ambit.
For maintenance or increase of supply of essential commodities within a province and to secure their equitable distribution and availability at fair prices, it might certainly be necessary to restrict export of the goods outside the province, and Pakistan being a foreign State abutting on the very borders of East Punjab, it was quite natural for the East Punjab Governor to mention Pakistan as one of the places to which export of goods from his province should not be allowed without a proper permit.
As 329 the main object of the legislation was the continuance of control over the production, supply and distribution of commodities considered essential to the community and as these are provincial subjects, the Central Legislature in legislating on them must have to invoke the powers conferred upon it by the India (Central Government and Legislature) Act, 1946 (9 & 10 Geo.
6, c. 39) spoken of above; and that is plainly the reason why a reference to that statute was made in the second paragraph, of the preamble.
But from this it cannot be argued that the Central Legislature was legislating only in exercise of the powers which it derived from the British Parliament and that it did not exercise the powers which it itself had under the Government of India Act.
It is not disputed that the Central Legislature was fully competent to legislate on exports and imports which are central subjects and in making any provision relating thereto, it cannot be said that it acted in excess of its authority.
Even taking the legislation to be purely on the provincial subjects of production, distribution and supply of goods, restriction of export as ancillary to production and supply of essential commodities would, in our opinion, be quite within the scope and ambit of such legislation and in pith and substance it would be an enactment dealing exclusively with these provincial matters.
Looked at from this standpoint, the other argument advanced by Mr. Achhru Ram would also be found to be without any substance.
The imports and Exports Act or the earlier Order and Ordinance, referred to by the learned counsel, were legislation essentially on the subject of exports and imports.
Their object was to regulate or control imports and exports generally and they dealt with a large variety of articles far outnumbering those enumerated in the Essential Supplies Act.
The object of the imports and Exports Act was not to regulate production and distribution of commodities considered essential to the community 330 and it was not as a means to secure that object that it purported to prohibit or restrict exporting of goods.
Thus the scope and purpose of the two sets of legislation were totally different and there was nothing wrong if they existed side by the side and were in operation at one and the same time, We are not told that there was any overlapping of the provisions of these two statutes; and as the competency of the legislature to enact both these sets of provisions is not disputed, we do not think that any occasional overlapping, even if it is assumed to exist, would be at all material.
In our opinion, therefore, the contentions raised in regard to the constitutional point involved in these appeals are unsupportable and could not be accepted.
As the appeals have come up before us on the strength of a certificate granted under article.
132(1) of the Constitution, the appellants are not entitled to challenge the propriety of the decision appealed against on a ground other than that on which the certificate was given except with the leave of this court as provided for by clause (3) of article 132 of the Constitution.
At the close of the arguments of the parties in regard to the constitutional point referred, to above.
, we made it clear to the learned counsel appearing for both the appellants that we would not allow any question relating to the merits of the cases to be raised before us which turned merely on appreciation of evidence by the courts below.
Mr. Umrigar, who appeared for Attar Singh the appellant in Case No. 12, however stated to us that he would crave leave to bring to our notice one important matter which, according to him, resulted in grave miscarriage of Justice at least so far as his client was concerned.
He pointed out that both the Additional Sessions judge and the learned Judge of the High Court in deciding the case against his client relied upon an admission alleged to have been made by the latter that he was present at the customs barrier at Wagha on the morning of the day of occurrence and had gone there to say good bye to the customs staff, he 331 being under an order of transfer from Amritsar to Gurdaspur.
It is said by the learned counsel that his client never admitted his presence at the customs barrier on the morning of 26th May, 1948, and that he neither did nor had any occasion to put forward any explanation regarding his presence there at that time.
The whole thing, it is said, is based upon sheer misapprehension and is not warranted by anything appearing on the record.
There is no doubt that the Additional Sessions Judge as well as the High Court did refer in their respective judgments to the alleged admission of Attar Singh and rely upon the same to arrive at their decision in the case.
The Additional Sessions Judge said in his judgment: " The next important man is Attar Singh accused.
He admits his presence at the barrier on that morning, when he says that he had gone to bid good bye to the customs staff on his transfer to Gurdaspur According to the leave obtained by him he had yet to remain at Amritsar till 28th and in view of illness of his wife he need not have been in hurry to go to the barrier for this purpose so soon.
I am not convinced with his explanation.
" The High Court in referring to the said admission observed as follows: " Attar Singh admitted that he was present at the barrier on that morning but the explanation he gave was this.
His office is at Amritsar but be had received orders of transfer to Gurdaspur.
His wife was ill and, therefore, he could not move immediately.
So he applied for a few days leave, and on the morning of the 26th of May he went to the barrier to say goodbye to his colleagues in the Customs Department and while he was there this incident took place without his knowledge. .
Attar Singh 's explanation of his presence at the spot does not convince me at all.
" It appears that in course of the examination of the accused Attar Singh under section 342 of the Criminal 43 332 Procedure Code before the trial Magistrate a specific question was put to him as to whether he could explain his presence on the scene of occurrence on the 26th May, 1948, although it was alleged that he was on leave.
To this question he replied categorically that he was not present as alleged.
In this state of the records, we asked the learned Advocate General, who appeared for the State of East Punjab, as to when and how was the admission referred to above made by Attar Singh.
The Advocate General, answered that the admission might be in the written statement which Attar Singh said he would file when he was interrogated under section 342 of the Criminal Procedure Code.
In order to clear up the matter we had the further hearing of the case adjourned to enable the Advocate General to produce before us the written statement, if any, that was filed by Attar Singh in the trial court.
The case was again taken up for hearing on the 26th of November last and the Advocate General frankly stated to us that no written statement by Attar Singh 'was on the records at all.
It is clear, therefore, that both the courts below in coming to their decision regarding the guilt of the accused did rely to a considerable extent on the so called admission of Attar Singh which, it must be held, had no existence in fact.
The Advocate General contends that even if there was an error committed by the courts below in this respect, we should nevertheless dismiss the appeal inasmuch as there is sufficient evidence to support the conviction of the accused independently of the so called admission of Attar Singh; and he invited us to examine the evidence ourselves and come to our own decision on the point.
Without in any way disputing our right to adopt this course in cases where it may be considered necessary, we think that in the circumstances of the present case the proper order to make will be to direct a rehearing of the appeal by the Session& Court on the evidence as it actually stands after excluding from consideration the alleged Admission of Attar Singh.
There can be no doubt 333 that the supposed admission was of a very damaging character and was highly prejudicial to the accused.
It is quite,, problematic to value its effect upon the minds of the Judges in the courts below and it is difficult for us to say that had it been excluded from consideration the courts would have come to the same decision of guilt or that conversely a verdict of acquittal would have been a perverse one.
In such cases, the function of this court, which is not an ordinary court of criminal appeal, is not so much to weigh and appraise the evidence again to find out the guilt or innocence of the accused as to see that the accused gets a fair trial on proper evidence.
It has been argued by Mr. Achhru Ram, and in our opinion quite rightly, that if the case of Attar Singh is to be heard afresh, the same order should be made in the case of Darshan Singh as well.
Not only are the two cases closely interconnected, but so far as Darshan Singh is concerned the prosecution sought to establish his complicity.
in the affair primarily by adducing evidence to show that he was in the company of Attar Singh when both of them approached Kulraj, the officer in charge of the police station, and requested him to allow the truck to pass through.
The Additional Sessions Judge observed in his judgment that the only motive of Darshan Singh was to help his colleague, namely Attar Singh, who was about to leave the district.
It is necessary, therefore, that the case of Darshan Singh should also be reheard and the whole evidence against him reconsidered with a view to find out whether he is guilty or innocent.
The result, therefore, is that both the appeals are allowed.
The judgment of the High Court as well as that of the Additional Sessions Judge are set aside and the cases remitted to the Sessions Court in order that they may be heard afresh on the evidence on record in the light of the observations made above after excluding from consideration the supposed admission of Attar Singh., Pending the decision of the Session a Court, the accused would remain on bail 7 on the same terms as before.
Appeals allowed.
Agent for the appellant in Case No. 11: Naunit Lal.
Agent for the appellant in Case No. 12: A. D. Mathur.
Agent for the respondent and the intervener G. H. Rajadhyaksha.
| Section 3 of the Essential Supplies (Temporary Powers) Act, 1946, which was passed by the Indian Legislature in 1946 empowered the Central Government by notified order to provide for regulating and prohibiting the production, supply and distribution of any essential commodity and trade and commerce therein; section 4 of the Act empowered the Central Government to delegate its powers under section 3 to the Provincial Government or any officer thereof.
The Governor of the Punjab to whom such powers had been delegated under section 4 passed the East Punjab Cotton Cloth and Yarn Control Order, 1947, which prohibited the export of cotton cloth and yarn to any country outside India except under a permit, and made export without permit an offence.
The validity of this order was questioned on the ground that the Governor had acted in excess of his powers in so far as lie prohibited export outside India without a permit: Held, (i) that, keeping the object of the Essential Supplies Act, 1946, in view and reading the words " trade and commerce " in a. 3 of the Act in the light of the context, these words could be interpreted as including the export of goods outside the Province including a neighbouring foreign State and the Governor in passing the impugned Order did not act in excess of the powers delegated to him; (ii)that as the Central Legislature was fully competent to legislate on exports and imports and making any provision relating thereto under the Government of India Act, 1935, it had power to make a law prohibiting export to a foreign State, even &part from the powers conferred on it by the India (Central Government and and Legislature) Act, 1946 (9 320 (iii) even taking the legislation to be purely on the provincial subjects of production, distribution and supply of goods, restriction of import as ancillary to production and supply of essential commodities would be quite within the scope and ambit of such legislation and in pith and substance the enactment would be one dealing exclusively with these provincial matters.
It is a cardinal rule of interpretation that the language used 'by the legislature is the true depository of the legislative intent, and that words and phrases occurring in a statute are to be taken not in an isolated or detached manner dissociated from the context, but are to be read together and construed in the light of the purpose and object of the Act itself.
|
160 of 1952.
Contempt of Court proceedings against the Editor, Printer and Publisher of the "Times of India" (Daily), Bombay and Delhi, for publishing a leading article in their paper of October 30, 1952, entitled A Disturbing Decision ".
M. C. Setalvad, Attorney General for India (P. A. Mehta, with him) (amicus curiae).
N. C. Chatterjee (Nur ud Din Ahmad and A. E. Dutt, with him) for the contemners.
December 12.
The Order of the Court was delivered by MAHAJAN J.
In its issue of the 30th October, 1952, the " Times of India", a daily newspaper published in Bombay and New Delhi, a leading article was published under the heading " A disturbing decision ".
The burden of it was that in a singularly oblique and infelicitous manner the Supreme Court had by a majority decision tolled the knell of the much maligned dual system prevailing in the Calcutta and Bombay High Courts by holding that the 217 right to practise in any High Court conferred on advocates of the Supreme Court, made the rules in force in those High Courts requiring advocates appearing on the Original Side to be instructed by attorneys inapplicable to them.
The article concluded with the following passage: " The fact of the matter appears to be that in the higher legal latitudes at New Delhi and elsewhere the dual system is regarded as obsolete and anomalous.
There is a tell tale note at the top of the rules framed by the Supreme Court for enrolment of advocates and agents to the effect that the rules were subject to revision and the judges had under consideration a proposal for abolishing the dual system.
Abolish it by 'all means if the system has outgrown its usefulness and is found incongruous in the new setting of a democratic Constitution.
But to achieve a dubious or even a laudable purpose by straining the law is hardly edifying.
Politics and policies have no place in the pure region of the law; and courts of law would serve the country and the Constitution better by discarding all extraneous considerations and uncompromisingly observing divine detachment which is the glory of law and the guarantee of justice." No objection could have been taken to the article had it merely preached to the courts of law the sermon of divine detachment.
But when it proceeded to attribute improper motives to the judges, it not only transgressed the limits of fair and bona fide criticism but had a clear tendency to affect the dignity and prestige of this Court.
The article in question was thus a gross contempt of court.
It is obvious that if an impression is created in the minds of the public that the judges in the highest court in the land 'act on extraneous considerations in deciding cases, the confidence of the whole community in the administration of justice is bound to be undermined and no greater , mischief than that can possibly be imagined.
It was for this reason that the rule was issued against the respondents.
218 We are happy to find that the Editor, Printer and the Publisher of the paper in their respective affidavits filed in these proceedings have frankly stated that they now realize that in the offending article they had exceeded the limits of legitimate criticism in that words or expressions which can be construed as casting reflection upon the court and constituting Contempt had crept into it.
They have expressed sincere regret and have tendered unreserved and unqualified apology for this first lapse of theirs.
We would like to observe that it is not the practice of this Court to issue such rules except in very grave and serious cases and it is never over sensitive to public criticism; but *hen there is danger of grave mischief being done in the matter of administration of justice,.
the animadversion cannot be ignored and viewed with placid equanimity.
In this 'matter we are of the same opinion as was expressed by their Lordships of the Privy Council in Andre Paul vs Attorney General of Trinidad (1), Where they observed as follows: "The path of criticism is A public way: the wrong headed are permitted to err therein; provided that members of the public abstain from imputing improper motives to those taking part in the administration of justice, and are genuinely exercising a right of criticism and not acting in malice or attempting to impair the administration of justice, they are immune.
Justice is not a cloistered virtue; she must be allowed to suffer the scrutiny and respectful even though outspoken comments of ordinary men.
" In view of the unconditional apology tendered by the respondents and the undertaking given by them to give wide publicity to their regret, we have decided to drop further proceedings and we accept the apology and discharge the rule without any order as to costs.
Rule discharged.
Agent for the contemners: Rajinder Narain.
(1) A.I.R. 1936 P.C. 141.
| It is not the practice of the Supreme Court to issue a rule for contempt of Court except in very grave and serious cases and it is never over sensitive to public criticism; but when there is danger of grave mischief being done in the matter of administration of justice, the animadversion will not be ignored and viewed with placid equanimity.
A leading article in the " Times of India " on the judgment of the Supreme Court in Aswini Kumar Ghose vs Arabinda Bose and Another ([1953] S.C.R. 1) contained the following statements: "the fact of the matter is that in the higher legal latitudes in Delhi the dual system was regarded as obsolete and anomalous. .
There is a, tell tale note at the top of the rules framed by the Supreme Court for enrolment of advocates and agents to the effect that the rules were subject to revision and the Judges had under consideration a proposal for abolishing the dual system. .
To achieve a dubious or even a laudable purpose by straining the law is hardly 216 edifying.
Politics and policies have no place in the pure region of the law and Courts of law would serve the country and the Constitution better by discarding all extraneous considerations and uncompromisingly observing divine detachment. . " In proceedings for contempt of Court: Held, that if the articles had merely preached to Courts of law a sermon of divine detachment no objection could be taken, but in attributing improper motives to the judges, the article not only transgressed the limits of fair and bona fide criticism but had a clear tendency to affect the dignity and prestige of the Court and it was therefore a gross contempt of court.
If an impression is created in the minds of the public that the judges of the highest court in the land act on extraneous considerations in deciding cases the confidence of the whole community in the administration of justice is bound to be undermined and no greater mischief than that can possibly be imagined.
[In view of the unconditional apology tendered by the Editor, Printer and Publisher and the undertaking given by them to give wide publicity to their regret, the proceedings were dropped.] Andrew Paul vs Attorney General of Trinidad (A.I.R. referred to.
|
Nos. 232,233, 286, 309, 320, 351, 319, 350, 354 and 490 of 1951.
Applications under article 32 of the Constitution for writs to enforce the fundamental rights of the petitioners.
C. K. Daphtar (R. M. Hajarnavis, with him) for the petitioner in Petition No. 232.
M. C. Setalvad (G. N. Joshi and B. M. Hajarnavis, with him) for the petitioner: in Petition No. 233.
B. M. Hajarnavis for the petitioners in Petitions Nos. 286, 309 and 320.
V. N. Swami for the petitioners in Petitions Nos., 350 and 351.
N. section Bindra (B. section Narula with him) for the petitioners in Petitions Nos. '319, 354 and 490.
T. L. Shivde, Advocate General of Madhya Pradesh, for the respondent in all the petitions, the State of Madhya Pradesh.
December 22.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
These are petitions under article 32 of the Constitution of India for directions or orders or writs to enforce the fundaments rights, of the petitioners to property by prohibiting, the respondent, the State of Madhya Pradesh, from enforcing their alleged rights under the Madhya Pradesh Abolition of Proprietary Rights Act, 1950.
The several petitioners entered into contracts and agreements with the previous proprietors of certain estates and mahals in the State under which it is said they acquired the rights to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac and to cut and carry away teak and timber and miscellaneous special of trees called hardwood and 478 bamboos.
The contracts and agreements are in 'writing some of them are registered.
There is no dispute about their genuineness, and it has not been alleged that they are 'collusive or fraudulent transactions.
Their dates and the several sums of money paid as consideration are set out in the petitions.
The petitioners allege that they have spent large sums of money in the exercise of their rights, and his fact too is not controverted.
Petitions Nos. 232, 233, 286, 309 and 320 of 1951 relate to tendu leaves which grow in shrub jungles and which are used in the manufacture of beedis or country made cigarettes, a very extensive and competitive business carried on by some of the petitioners involving an outlay of one to two lakhs of rupees in some cases.
For instance, 406 contracts are involved in Petition No. 232 of 1951 ; the consideration paid comes to Rs. 1,65,385 and the expenses are alleged to be in the region of Rs. 1,90,000.
In Petition No. 233 of 1951 there are 785 contracts; the purchase money is Rs. 1,10,605 and the outlay byway of 'expenses is said to be Rs. 50,000.
Petition No. 319 of 1951 relates to the culture and cultivation of lac, and there are several lease deeds of different dates enuring for different periods; two of them go up to the years 1966 and 1967.
Teak,, timber and hardwood form the subject matter of the rights involved in Petition No. 350 of 1951 and the registered lease deed is dated 8th October, 1949, and it is for a term of ten years.
Petition No. 351 of 1952 involves tendu leaves and miscellaneous forest produce and timber.
Petition No. 354 of 1951 relates to bamboo forests, and Petition No. 490 of 1951 to hardwood and bamboo.
The contentions of the petitioners are mainly three in number.
They say that the rights acquired by them under these contracts and agreements were got before the passing of the Madhya Pradesh Abolition 479 of Proprietary Rights Act, 1950, and that the legislation therefore does not affect them.
It is urged next that they are not proprietors within the meaning of the Act and consequently the Act does not apply to them.
Lastly, the question is raised that the Act itself is ultra vires, as many of its material provisions offend their fundamental rights guaranteed under the Constitution.
The full title of the Act is the " Madhya Pradesh, Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 ", and it is Madhya Pradesh Act I of 1951.
It came into force on 26th January, 1951.
On the very next day, there was a notification under section 3 of the Act putting an end to all proprietary rights in estates, mahals and alienated villages and vesting the same in the State for the purposes of the State free of all encumbrances with effect from 31st March, 1952.
The validity of the Act was questioned by the affected proprietors in Visheshwar Rao vs The State of Madhya Pradesh (1) before this Court, and the Act was held to be valid.
The petitioners are concluded.
We have to consider only the other two points raised on behalf of the petitioners.
It is clear from the provisions in the impugned Act that only those rights of the proprietor vest in the State which the proprietor had on the specified date.
Section 3 provides that on and from a date to be specified by a notification by the State Government, all proprietary rights in an estate or mahal vesting in a proprietor shall pass from him to and vest in the State.
The consequences of vesting are given in section 4 of the Act, and it is provided that the vesting will take place, notwithstanding anything.
contained in any contract, grant or document or in any other law for the time being in force and save as otherwise provided in this Act.
But this again deals only with the rights existing on the date of the notification the section is not retrospective.
(1) 480 Clause (a) speaks of all rights,title and interest vesting in the proprietor or any person having interest in such propreitory right through the proprietor.
Clause (b) is to this effect "all grants and confirmation Of title of or to land in the property so vesting Or Of or, to any right or privilege in respect of such property orland revenue in respect thereof shall, whether liable to resumption or not, determine;" The right or privilege referred to is the right or privilege of the proprietor or any person having interest in the proprietary right through the proprietor.
Clause (c) is quite clear on the subject; it runs thus: "all rents and cossesi in respect of any holding in the property so vesting for any period after the date of vesting and which.
but for the vesting, would be payable to the proprietor shall vest in and be payable to the State Government. ." The words " after the date of vesting " are important.
Sub section (3) of section 4 says Nothing contained in subsection (1) shall operate as a bar to the recovery by the outgoing proprietor of any sum which becomes due to him before the date of vesting by virtue of his proprietary rights and any such sum shall be recoverable by him by any process of law which but for this Act would be available to him.
" If the outgoing proprietor is entitled to, recover any sums as quid pro quo for what he has parted with under the transfer, it can only be on the basis that the transfer is a good and valid transaction unaffected by the Act.
Section 6 is very material, and it is in these terms ' (1) Except as provided in sub section (2), the transfer of any right in the property 'Which is liable 481 to vest in the state under this Act made by the proprietor at any time after the 16th March, 1950, shall,.
as from the date of vesting, be void.
(2) Where on the.
application of the transferor or the transferee, the Deputy Commissioner is satisfied that any transfer of property referred to in subsection (1) was made by a proprietor in good faith and in the ordinary course of village management, he may declare that the transfer shall, not be void* after the date of vesting.
" The date, 16th March, 1950, is probably the date when legislation on these lines was actively thought of, and sub section (1) hits at transfers made after this date.
This means that transfers before that date are not to be regarded as void.
Even in the case of transfers after the said date, sub section (2).
provides that the Deputy Commissioner may declare that they .are not void after the date of vesting, provided they were made in good faith and in the ordinary course of management.
, The scheme of the Act as can be gathered from the provisions referred to above makes it reasonably clear that whatever was done before 16th March, 1950, by the proprietors by way of transfer of rights is not to, be disturbed or affected, and that what vests in the State is what the proprietors had oil the vesting date.
If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee, those rights would no doubt vest in the State.
In all these petitions, the several contracts and, agreements were before the date of vesting, and many of them were prior even to the 16th March, 1950.
The petitioners had taken possession of the subject matter of the contracts, namely, tendu leaves, lac palsadies, teak, timber and hardwood, bamboos and miscellaneous forest produce.
Under the Indian Sale of Goods Act, "goods" include growing crops, grass and things attached to or forming part of the land, which are agreed to be severed before sale or under the contract of sale 482 notwithstanding the definition of "immovable property " in section 3 (25) of the General Clauses Act of 1897.
In Petition No. 232 of 1951 two sample agreements relating to tendu leaves are given as annexures A and B to the petitions.
They may be quoted in extenso for a clear understanding of the nature of the right created.
Exhibit A dated 16th November, 1950, is in these terms: " Receipt written in favour of Seth Chhotabhai Jethbai Patel Company shop Gondia, and written by Shri Madhavrao Gangadhar Rao Chitnavis shop Itan receipt is written that we are owners of forests of Tendu leaves of Monza Sawarla 0 12 0 Mauza Khatkheda 0 5 0 Mouza Nati Kheda 0 16 0 and Monza Welwa 0 16 0.
We have given contract (Theka) of cutting Tendu leaves from these four villages for one year that is till the end of June for Rs. 2,500 out of this we had received Rs. 300 on 21st September, 1950, at Bhandara and the balance Rs. 2,200 was received from your Bhandara shop through Balubhai.
Nothing remains to be paid to us.
You have a right to coppice the trees.
" The terms of Exhibit B dated 12th July, 1948, Emitting unnecessary portions are as follows: In the year 1948 A.D. theka patra is executed that in consideration of the amount received as detailed above I had given the full tendu leaves jungle for taking out tendu leaves for five years from 1949 A.D. to 1053 A.D.
I have immediately given possession.
Now you can take tendu leaves of the tendu leaves forests described above every year for five years till the end of June, 1953.
You may coppice the plants and take leaves.
At the end of June, 1953, you should return my jungle without damage or loss to me.
After the end of the period it depends upon my will whether or not I give you the forests on theka (again).
If any one obstructs you in coppicing or taking away leaves, I will be responsible for the damages.
Hence I have executed 483 this theka pathi for five years for consideration after reading and understanding.
I agree with it.
Dated 12th July, 1948, by pen of Waman Sadeshic Amte Petition Writer Bhandara.
" The contracts and agreements appear to be in essence and effect licenses granted to the transferees to cut, gather and carry away the produce in the shape of tendu leaves, or lac, or timber, or wood.
A similar agreement came up for consideration by the Judicial Committee of the Privy Council in Mohanlal Hargovind of Jubbulpore vs Commissioner of Income tax, Central Provinces and Berar, Nagpur (1) in connection with a question arising out of the Income tax Act.
Some of the observations contained in the judgment dealing with the nature of such an agreement are useful and may be quoted here : " The contracts grant no interest in land and no interest in the trees or plants themselves.
They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which, of course, implies the right to appropriate them as their own property.
The small right of cultivation given in the first of the two contracts is merely ancillary and is of no more significance than would be e.g., a right to spray a fruit tree en to the person who has bought the crop of apples.
The contracts are short term contracts.
The picking of the leaves under them has to start at once or practically at once and to proceed continuously.
" There is nothing in the Act to affect the validity of the several contracts and agreements.
The petitioner are neither proprietors within the meaning of the Act nor persons having any interest in the proprietary right through the proprietors.
There is no provision in the Act which extinguishes their rights in favour of the State. 'What exactly is meant by a ,proprietary right " under the revenue laws has been (1).I.L.R. , 63 484 pointed out at page 217 of Volume I of Baden Powell 's Land Systems of British India, where he says: The first thing that will strike the student is the .use of the term ' proprietary right ' in these pages and in Indian Revenue Books generally.
It does not occur in text books on English law or jurisprudence.
I presume that the use of such a phrase is due to the ad feeling that we rarely acknowledge anything like a complete unfettered right vested in any one person.
The interest in the soil has come to be virtually shared between two or even more grades, the cause of which we just now discussed.
It is true that, in many cases, only one person is called ' landlord ' or ' actual proprietor ' but his right is limited; the rest of the right, so to speak, is in the hands of the other grades, even though they are called 'tenants ' or by some vague title such as ' tenure holders. ' In many cases, as we have seen, this division of right is accentuated by the use of terms like sub proprietor ' or proprietor.
of his holding '.
The 'proprietary right seems then a natural expression for the interest held by a landlord, when that interest is not the entire 'bundle of rights ' (which in the aggregate make up an absolute or complete estate) but only some of them, the re mainder being enjoyed by other persons.
" The definitions given in the Act do not abrogate or vary this meaning.
The respondent State cannot invoke in its aid section 3, sub clause (1) of the Act which speaks of the vestina of proprietary rights free of all encumbrances, because the rights of the petitioners either as buyers or lessees or licensees are not encumbrances as ordinarily understood.
The last part of clause (a) of section 4 (1) indicates that mortgage debts and charges on the proprietary right are meant by encumbrances.
In this view, it becomes unnecessary to consider the question as to when title in the property passes to the transferee.
Section 4, sub section (3) of the Indian Sale of Goods Act which lays down that in the case of sale of future goods the contract amounts 485 only to an agreement to sell does not seem to be applicable to the contracts and agreements here, as the goods are not " future goods " as defined in subclause (6) of the Act which states that they mean goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.
Benjamin says in his treatise on Sale (8th Edition) at page 136: " Things not yet existing which may be sold (that is to say, a right to which may be immediately granted) are those which are said to have a potential existence, that is, things which are the natural produce, or expected increase of some thing already owned or possessed by the seller.
A man may sell the crop of hay to be grown in his field, the wool to be clipped from his sheep at a future time, the milk that his cows will yield in the coming month, and similar things.
Of such things there could be, according to the authorities, an immediate grant or assignment, whereas there could only be an agreement to sell where the subject of the contract is something to be afterwards acquired; as the wool of any sheep, or the milk of any cows, which the seller might buy within the year, or any goods to which he might obtain title within the next six months.
" The goods covered by the present petitions are goods which have a potential existence, and according to the decisions discussed by the learned author, there can be a sale of a present right to the goods as soon as they come into existence.
Whether title passes on the date of the contract itself or later is really dependent on the intention of the parties, and as already stated, in these petitions the stipulated consideration has passed from the transferees to the proprietors, and possession also has been taken.
We hold that the respondent has no right to interfere with the rights of the several petitioners under the contracts and agreements in their favour set out in their petitions, and we hereby issue a writ prohibiting the State from interfering in any manner whatsoever with the enjoyment of those rights by the 486 petitioners.
In cases where the periods under the contracts have expired, or where the proprietors have ill to recover anything from the transferees after he date of vesting, the State will be at perfect liberty to assert and enforce its rights standing in the shoes of the proprietors.
The respondent will pay the petitioners their respective costs.
Petition allowed.
Agent for the petitioners in Petitions Nos.
232, 233, 286, 309 and 320 : Bajinder Narain.
Agent for the petitioners in Petitions Nos. 360 and 351: M. section H. Sastri.
Agent for the petitioners in Petitions Nos. 319, 354 and 490: Harbans Singh.
Agent for the respondents in all petitions: G. H. Rajadhyaksha.
| The Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act of 1950 put an end to all proprietary rights in estates, mahals and alienated villages situated in the State and vested them in the State for the purposes of the State, free from all encumbrances.
The petitioners, who had entered into various contracts and agreements with the proprietors of the estates before the date on which the estates vested in the State under the Act (and,some of them even before the 16th March, 1950) under which they were entitled to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac, and to out and carry away teak and timber and other species of trees, applied for writs under art 32 of the Constitution prohibiting the State from interfering with the rights they had, acquired under the contracts with the proprietors: Held, (i) On construction of the contracts in a question, that the contracts were in essence and effect licenses granted to the petitioners to cut, gather and carry away produce in the shape of tendu leaves, lac, timber, or wood and the petitioners were neither proprietors nor persons having any interest in the proprietary rights through the proprietors, within the meaning of the Act; (ii) The rights of the petitioners were not encumbrances within the meaning of the expression "free from encumbrances in section 3 . 1) of the Act and the petitioners were entitled to a writ against the State prohibiting the State from interfering with the rights of the petitioners under the contracts which they had entered into with the proprietors.
Mohanlal Hargovind vs Commissioner of Income tax, C.P,& Berar (I.L.R. [19491 Nag. 892) referred to.
Held also, that section 4 (3) of the Indian Sale of Goods Act which lays flown that in the case of sale of future goods the contract 477 amounts only to an agreement to sell did not apply to the contracts in the present case as "future goods" are defined in the Act as meaning goods to be manufactured or produced or acquired by the seller after making the contract of sale.
|
Appeal No. 9 of 1952.
Appeal from the Judgment and Order dated 2nd January, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 68 of 1946.
M. C. Setalvad, Attorney General for India, (P. A. Mehta, with him) for the appellant.
K. section Krishnaswami Aiyangar (M. Subbaraya Aiyar, with him) for the respondents.
December 22.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal from,the judgment of the High Court of Judicature at 'Madras in a reference made by the Income tax Appellate Tribunal under section 66 (1) of the Indian Income tax Act, XI of 1922.
488 For several years prior to 1939 40 the respondents, .who are.
brothers, had been carrying on in partnership the business of " The Hindu," a daily newspaper of Madras.
The profits of this business had been charged to income tax in the hands of the respondents under the Indian Income tax Act of 1918.
The firm 's year of account was a period of twelve months ending with 30th June each year.
In respect of the profits of the year of account ending 30th June, 1938, assessment was made in the year 1939 40 and the firm was charged to income tax for that assessment year.
On 1st March, 1940, the respondents transferred their business as a going concern to a private limited company called " Kasturi and Co. Ltd." For the assessment year 1940 41 the respondents claimed that the firm was not liable to pay any income tax on the income of its business from the end of the accounting year ending 30th June, 1938, to 29th February, 1940, the date on which the limited company succeeded to the business of the firm (i.e., for a period of 20 months) under section 25 (4) of the Act, as it had been assessed under the Indian Incometax Act, 1918.
The Income tax Officer disallowed the claim and held that since the assessment pertained to the year 1940 41 the previous year with reference to that assessment would be the year ending 30th June, 1939, and the period for which exemption could be claimed under section 25(4) of the Act was the interval from the end of that previous year, i.e., 1st July, 1939, upto to the date of succession, i.e., 29th February, 1940, i.e, a period of eight months.
This order was confirmed on appeal by the Appellate Assistant Commissioner.
On further appeal the Tribunal held that on a proper construction of section 25(4) of the Act, tax was not payable by the firm in respect of the profits and accounts of the business for the whole of the period from 1st July, 1938, to 29th February, 1940, (a period of 20 months).
At the instance of the Commissioner of Income tax (the appellant) the Tribunal stated a case to the High Court and referred to it the following question for its opinion: 489 " Whether on the facts of this case, the Appellate Tribunal was right in holding that the period the profits of which were entitled to exemption from the payment of tax under section 25(4).
of the Indian .Income tax Act, 1939, was the period commencing from 1st July, 1938, and ending.
With 29th February, 1940.
" The reference was heard by Satyanarayana Rao and Viswanatha Sastri JJ.
and they delivered divergent opinions on the question referred.
Satyanarayana Rao J. agreed with the conclusion of the Tribunal and answered the question in the affirmative, while Viswanatha Sastri J. answered the question in the negative, with the result that under the provisions of the law the Tribunal 's order was confirmed, it being in accordance with the opinion delivered by the senior Judge.
Leave to appeal to this Court was granted and this appeal is before us on a certificate given by the High Court.
The principal question to decide in this appeal is whether on a true construction of section 25(4) of the Act, and on the facts stated the period the profits of which were entitled to exemption from the payment of tax is the period between 1st July, 1939, to 29th February, 1940, (a period of eight months) or the period commencing from 1st July, 1938, and ending with 29th February, 1940 (a period of 20 months).
To decide this question it is necessary to set out the relevant provisions of the Act.
Section 2(11), which defines " previous year " in so far as it is relevant for purposes of this appeal is : " (11) (a) the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee the year ending on the day, to which his accounts have so been made up." 490 Section 3 of the Act provides: Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually.
" This is the charging section.
Section 25 of the Act makes different provisions to cover some special cases.
The parts of the section relevant to this appeal pro vide as follows: (1)Where any business, profession or vocation to which sub section (3) is not applicable, is discontinued in any year, an assessment may be made in that year on the basis of the income, profits or gains of the period between the end of the previous year and the date of such discontinuance in addition to the assessment, if any, made on the basis of the income, profits or gains of the previous year.
(3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918 (VII of 1918), is discontinued, then, unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on 491 the basis of such assessment, a refund shall be given of the difference.
(4) Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any times charged under the provisions of the Indian Incometax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.
(6) Where an assessment is to be made under subsection (1), sub section (3), or sub section (4) the Income tax Officer may serve on the person whose income, profits and gains are to be assessed, or, in the case of a firm, on any person who was a member of such firm at the time of its discontinuance, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section.
" For a proper construction of section 25 it is also necessary to set out the history and object of this enactment.
Under the Act of 1918 income tax was levied on the income of the current year, i.e., the year of 492 assessment but as the income of that year could not be known till after the expiry of the year, the assessment was made on the basis of the income of the " previous year" but after the close of the assessment year an ,adjustment used to be made on the basis of the income of the assessment year.
The Act of 1922 introduced a change in this respect.
Under section 3 of the Act, 'the income of the previous year is made the subject of the charge and tax is levied on the income of the previous year though it is a tax for the assessment year.
On the passing of the Act of 1922, the previous system of assessment was kept alive for one year.
The result was that for the year 1922 23, there were two assessments, one under the Act of 1922 on the income of 1921 22 and another under the old system byway of assessment on the income of the same year 1921 22.
In other words, the income of the year 1921 22 was assessed twice, once under the Act of 1918, and again under the Act of 1922.
To remove this anomaly and in order to make the number of assessments tally with the number of years during which the business existed, section 25(3) of the Act of 1922 was enacted exempting from tax the profits for the period between the end of the previous year and the date of discontinuance in the case of a business whose profits had been assessed to tax under the Act of 1918.
There was no provision in section 25 as enacted in 1922 for giving any relief in cases of succession to a business which was taxed under the Act of 1918.
In 1939 a provision was made to extend similar relief to cases of succession and with this object section 26(2) of the Act was amended and section 25(4) was added by the amending Act of 1939.
The result of the amendment of section 26(2) and the insertion of section 25(4) is that upon a transfer of business the transferor, i.e., the person who was succeeded in the business, would get the same relief as if the business had been discontinued by him.
The scheme of the Act is that by the charging section, i.e., section 3, income tax is levied for a financial year at the rate prescribed by the annual Finance Act 493 on the total income of the previous year of every in dividual, etc.
Each previous year 's income is the, subject of separate assessment in the relative assessment year.
Though the year of assessment is the financial year, the previous year of an assessee need not necessarily be the previous financial year, for this expression is to be understood as defined by section# 2(11) (a) of the Act.
The respondents were duly assessed to tax for the year of assessment, i.e. the financial year 1939 40, on the income of the previous year ending on 30th June, 1938.
Their income of the accounting year ending 30th June, 1939, would in the ordinary course be liable to assessment in the financial year 1940 41, and the profits of the year ending 30th June, 1940, would be assessable in the financial year 1941 42.
Succession took place in the accounting year 1939 40.
Under sub section (2) of section 26, as it stood before its amendment in 1939, the person succeeding to a business was liable to tax for the year of succession, as if he had been carrying on business throughout that year and had received the profits of the whole of that year.
Thus Kasturi and Company Limited would have been liable to be assessed on the profits earned during the year ending 30th June, 1940, irrespective of the fact that actually they would have only received profits in that year for a period of four months.
After the amendment in 1939 sub section (2) of section 26 provides that the person succeeded and the person succeeding " each be assessed in respect of his actual share, if any, of the income, profits and gains of that year.
" Thus the profits of the year in which the succession occurs are to be apportioned between the predecessor and the successor according to the actual share of each in the year 's profits, the predecessor and the successor are each liable to tax at the rate applicable to each and the profits of each have to be computed separately in accordance with the provisions of section 10 and other sections and each has to be granted the deductions and allowances appropriate to his case, and 494 assessment on each has to be separate and distinct.
If the business was charged under the Indian Incometax Act, 1918, and the person succeeded is exempt from tax under section 25 (4) he would not charged in respect of the profits of the period from the end of the previous year up to the date of succession, while the person succeeding would be liable under sub section (2) of section 26 in respect of the profits earned by him after the date of succession.
The proviso to sub section (2) lays down two exceptions to the general rule that the successor is not liable to tax in respect of the profits of the period prior to the date of succession.
In two cages, namely, (1) when the predecessor cannot be found, or (2) when the tax assessed on the predecessor cannot be recovered from him, the successor is liable to pay the tax in respect of the profits of the year in which the succession took place up to the date of succession as well and further for the profits earned during the year preceding that year.
In this case if either of those contingencies arose, Kasturi and Company Limited would have been liable to pay tax on profits of the whole accounting year ending 30th June, 1939, as well as of the whole of the accounting year ending 30th June, 1940, and end of the preceding year in this context would be 30th June, 1939.
It is a question whether in this situation they would be entitled to the relief provided in section 25(4).
On behalf of the Commissioner of Income tax, Madras, the learned Attorney General contended that Satyanarayana Rao J. was in error in granting exemption to the firm from tax in respect of the profits earned during a period of 20 months and that under section 25, sub section (4), the only relief permissible was in respect of profits earned during the period of 8 months from 1st July, 1939, to 1st March, 1940.
It was said that the profits of the year of succession were liable to assessment in the usual course in the financial year 1941 42 and the Income tax Officer had no power to make an accelerated assessment in order to give relief to the persons succeeded in the business 495 and that being so, it was not right to hold that the expression " previous year" in section 25, sub section (4), was co related to the assessment year 1939 40, i.e the year in which,the succession took place or to the assessment year 1941 42 in which in the ordinary course assessment for those profits would have been made but that on a true construction of this sub section and having regard to the history of its enactment and the object for which it was inserted in section 25, the assessee firm was entitled to exemption from the payment of tax, only for the period between 1st July, 1939, and 29th February, 1940, and to no more.
It seems to us that there is force in this contention, Section 25 (4) was inserted in the Act of 1922 in the year 1939 at the same time as section 26(2) was amended.
On a plain reading of these two sections together, it is quite clear that the Income tax Officer is not empowered to make an accelerated assessment in the year in which succession occurs on the ' profits of that year, and prematurely assess the person succeeding to a business so that he may able to give ' relief to the person succeeded.
The exemption provided for its section 25 (4) and the apportionment mentioned in section 26 (2) have to be made in the assessment year in which the profits of the year of succession fall to be assessed under sections of the Act, and in this situation the end of the 'previous year in this case can, in no circumstance, be the end of the accounting year beginning 1st of July, 1937, and ending 30th of June, 1938, because the income, profits and gains of the accounting year of succession (i.e., year beginning 1st July, 1939, and ending 30th June, 1940) which have to be apportioned between the predecessor and successor of the business under section 26(2) and for which the successor becomes liable in case the predecessor commits a default, could only be assessed in the assessment year 1941 42.
The income, ' profits and gains of the accounting year beginning 1st July, 1938, and ending 30th June, 1939, for which the predecessor alone is liable in the first instance to 496 tax fall for assessment in the assessment year 1940 41.
The successor in business, in case of default by the predecessor, is also liable to pay the tax on the profits of that year as well.
What subjection (4) of section 25 provides is that when the profits of the year of succession fall to be assessed, the predecessor of a business can claim exemption from liability to pay tax on the profit earned from the end of the previous year to the date of succession, the "Previous year" here meaning the completed accounting year immediately preceding the date of succession (in this case year ending 30th June, 1939).
He can further claim that the profits earned between 1st July, 1939, to 29th February, 1940, be deemed the profits of the accounting year 1st July, 1938, to 30th June, 1939, and if on those profits in assessment year 1940 41 tax in excess of what is chargeable on the profits of this broken period has been paid, be given refund for the excess.
Truly speaking, the firm was entitled to the relief provided for in section 25(4) in the assessment year 1941 42 but the Income tax Officer was prepared to give him that in the assessment year 1940 41,and on that score the assessee can have no grievance.
Satyanarayana Rao J. held that the words " previous year " in sub . section (1) of section 25 refer to the year of account relevant to the year of assessment in which the discontinuance occurs, that the section authorises the Income tax Officer to make a cumulative assessment in respect of the profits of the period between the end of the last accounting year of which the profits have been assessed before the date of discontinuance and that date, that " sub section (3) of section 25 is an exception to the general rule contained in sub section (1) of that section, and that, though the language employed in sub section (3) does not correspond to the language employed in sub section (1) indicating that in this Sub section also the assessment year should be taken to be the year in which the discontinuance occurs, all the same there is no reason 497 to depart and to place a different interpretation on the expression 'previous year ' in this sub section$ from the one placed on sub section (1).
" On the same line of reasoning the learned Judge gave the same meaning to the expression " previous year " in subsection (4) of section 25 and as a result held that the firm was 'entitled to exemption from tax for profits earned between the 1st July, 1938, and 29th February, 1940, a period of 20 months.
Mr. Krishnaswami Aiyangar appearing for the respondents, was not prepared to support the whole of the reasoning of Satyanarayana Rao J. but he contended strenuously that the conclusion reached by the learned Judge was the only one that could be reached on a true construction of the phraseology employed in the various sub sections of section 25.
In short, his argument was that sub section (1) of section 25 confers an option on the Income tax Officer, in case of discontinuance of a business which was not assessed under the Act of 1918, to make an accelerated assessment in the year of discontinuance itself on the income, profits and gains earned up to the period of discontinuance and not assessed before in any preceding assessment year; that the expression " previous year" in the context of this sub sec tion means the end of the accounting year the profits of which have been last assessed to tax, which in this case means the year ending 30 th June, 1938.
It was further contended that any other meaning given to these words would create a hiatus and would lead to the result that on the date of discontinuance the Income tax Officer would be entitled to assess the profits of the broken period without being entitled to assess the profits of a whole previous year that had expired, the profits of which in the usual course could not be assessed in the year of discontinuance and that such a construction would defeat the very purpose of the power given by the sub section.
On a parity of reasoning it was suggested that the words "between the end of the previous year and the date of such discontinuance" in subsections (3) and (4) 498 should be given the same meaning as in sub section (1), and that the assessee should be given exemption in respect of profits earned between the 1st July, 1938, and 29th February, 1940.
It was said that the two terminals fixed for the purposes of assessment under section 25(1) were the terminals fixed for exemption from tax in section 25(3) and (4) and it would be wrong to hold that the assessment under section 25(1) could be made for a period different from that for which relief could be given under section 25 (3) and (4).
It was urged that the scope of the charge authorised by section 25 (1) was co extensive with the extent of the relief provided for in subsections (3) and (4).
Before proceeding further it is convenient to make a few observations regarding the proposition stated by Satyanarayaua Rao J. that section 25 (1) provides for cumulative assessment in cases of discontinuance of business.
The words of the section do not justify this conclusion.
They do not empower the Incometax Officer to make a cumulative assessment in respect of profits earned in two different accounting periods or entitle him to merge the profits of two years into one total sum and apply to them the rate of one of the financial years.
All that the section authorises the Income tax Officer to do is that it gives him an option to make a premature assessment on the profits earned up to the date of discontinuance in the year of discontinuance itself instead of in the usual financial year.
This assessment he is entitled to make in addition to the normal assessment for the financial year of discontinuance.
Mr. Aiyangar very rightly conceded that the construction placed on subsection(1) of section 25 by the learned Judge in this respect was not right.
As regards the main contention of Mr. Aiyangar based on the analogy of the language employed in sub section (1) of section 25, we are of the opinion that this contention is based on a fallacy and cannot be sustained.
As above pointed out, sub section (1) of section 25 merely empowers the Income tax Officer, 499 if he so chooses to do, to make an accelerated assessment in case of discontinuance of business at the time of discontinuance to save loss of revenue by the disappearance of an assessee.
In other words, the subsection imposes a liability of premature assessment on the assessee.
It confers no benefit on him.
Sub sections (3) and (4) of section 25 have a different end in ' view and are not in pari materia with sub section (1).
They are in the nature of substantive provisions intended to give relief from tax charged in certain cases.
The mere circumstance of their being grouped together with sub section (1) in section 25 cannot lead to the conclusion that the provisions therein contained are of the same nature and character as the provi sions contained in sub section (1).
Satyanarayana Rao J. was clearly in error when he held these two subsections were in the nature of exceptions to the rule laid down in sub section(1).
The truth of the matter is that it is sub section(1) itself which is an exception to the general rule laid down in the charging section of the Act, namely, section 3.
The object of sub sections (3) and (4) is to provide relief to a business for the double assessment suffered by it in the financial year 1922 23 and it is entitled to this relief in the year of assessment in which the income and profits of the accounting period in which discontinuance or succession takes place fall to be assessed.
The Income tax Officer is not authorised to accelerate the relief by making a premature assessment on these profits.
Not only is the language of these two sub sections different from the language of sub section (1), but they deal with two different categories of assessees.
Sub 'section (1) deals with a category of assessees who were never subjected to double tax, while sub sections (3) and (4) deal with that class who suffered assessment under the Act of 191.8 and paid double tax.
The liability for premature assessment imposed under section 25 (1) on the former class of assessees has feed imposed on considerations entirely different from those on which provision has been made for exemption to tax in sub sections 65 500 (3) and (4) for the other class.
In, these circumstances, such relief cannot be said to be co extensive with the liability imposed.
Moreover, the provisions of the Income tax Act in respect to exemptions and deductions cannot be construed on the 'analogy of the provisions contained in the charging sections of the Act even if the language of these provisions is similar.
Mr. Aiyangar 's contention that sub section (1) crystallizes the rights of the assessee on the date of discontinuance and that not only does it relieve him from being taxed after the date of discontinuance, but that it entitles him to further relief provided for in sub section (3) does not seem to be well founded.
Sub section (1) of section 25 confers no right of any kind on an assessee which can crystallize on the date of discontinuance and which cannot be varied subsequently to his disadvantage.
On the other hand, as already said it imposes a premature burden on the assessee which but for this sub section he could not be called upon to bear till the appropriate year of assessment was reached.
The learned Attorney General was not prepared to accept the construction placed on Sub section (1) of section 25 by Mr. Aiyangar and contended that sub section did not authorise the Income tax Officer to make an assessment in the year of discontinuance on the profits of an accounting year which had come to a close before the date of discontinuance, and that those profits had to be assessed in the usual way in the appropriate financial year, and that authority given to make an accelerated assessment only related to the broken period beginning with the end of the completed accounting year immediately preceding the date of discontinuance and ending with the date of discontinuance.
In our opinion, it is not necessary for the purposes of deciding this case to finally express an opinion as to the true meaning of the words " between the end of the previous year to the date of discontinuance " used in section 25 (1) of the Act.
After a careful consideration of the different provisions of the Act relevant to this enquiry, we have 501 reached the conclusion that the expression "end of the previous year " in sub sections (3) and (4) of section 25 in the context of those sub sections means the end of an accounting year (a period of full 12 months) expiring immediately preceding the date of discontinuance or succession, (in this case 30th.
June, 1939).
We are satisfied that Viswanatha Sastri J.".
was right when he held that having regard to the object of the legislature in enacting sub sections (3) and (4) of section 25 and having regard to the plain language of these sub sections, the assessee 's contentions could not be upheld.
We are, however, unable to subscribe to the conclusion reached by the learned Judge that the expression " previous year " in subsections (3) and (4) of section 25 was co related to the year of assessment 1940 41.
The profits of the year of discontinuance could not, according to the scheme of the Act, be taxed till the financial year 1941 42 and the previous year co related to that assessment year would be the accounting year ending 30th June, 1940.
It is obvious that the 'end of the accounting year falling after the date of discontinuance could not appositely be said to be the end of the previous year preceding that date.
The expression ((previous year" substantially means an accounting year comprised of a full period of twelve months and usually corresponding to a financial year preceding the financial year of assessment.
It also means an accounting year comprised of a full period of twelve months adopted by the assessee for maintaining his accounts but different from the financial year and preceding a financial year.
For purposes of the charging sections of the Act unless otherwise provided for it is co related to a year of assessment immediately following it, but it is not necessarily wedded to an assessment year in all cases and it cannot be said that the expression "previous year" has no meaning unless it is used in relation to a financial year.
In a certain context it may well mean a completed accounting year immediately preceding the happening of a contingency.
The construction we have placed on 502 this expression in sub sections (3) and (4) of section 25 is in accord with the substance of the definition given in section 2 (1 1) of the Act.
Any other construction of the section is bound to lead to a number of anomalies, the most glaring being that in case of persons whose year of account is the financial year, exemption from tax under section 25 (3) or (4) could never be given for a period of more than twelve months, while in case of persons who adopt different accounting year, exemption would become available for a period extending up to 24 months.
Such could never have been the intention of the framers of the Act.
That the "previous year" in the context of section 25(3) and (4) means a completed accounting year immediately preceding the discontinuance or succession is borne out by the provisions as regards nonliability for tax for the broken period and the 'claim to be made by the assessee that the income, profits and gains of the previous year shall be deemed to have been the income, profits or gains of the broken period.
The intention of the legislature being to give relief against double assessment for the year 1922 23, the assessee in the case of discontinuance or succession would be entitled to claim exemption from payment of tax for the broken period and also claim that the income, profits or gains of the previous year, i.e.) the year preceding the broken period, should be treated as the income, profits or gains of the broken period.
Reference was made in the judgment of the Appellate Tribunal to the views of the Select Committee when clause (1) of section 25 was considered at the time of the draft Bill No. XXVI of 1921 in support of its conclusion, but it was rightly held by the High Court that it was not a permissible consideration in interpreting a statute and Mr. Aiyangar did not seriously press this matter before us.
He, however, drew our attention to the directions contained in the Income tax Manual in force for a number of years and contended that the department itself placed on sub sections (3) and (4) of section 25 the same construction as was 503 placed on them by the senior Judge in the High Court and that was the true construction of these two sub sections.
This argument, in our opinion, has no ' validity.
The department changed its view subsequently and amended the manual.
The interpretation placed by the department on these sub sections cannot be considered to be a proper guide in a matter like this when the construction of a statute is involved.
The result is that we allow the appeal and hold that the answer given by the senior Judge to the question referred was wrong and that the answer given by Viswanatha Sastri J. was the correct one.
In the circumstances of this case we would make no order as to costs throughout.
Appeal allowed.
Agent for the respondent : M. section K. Aiyangar.
| Two brothers who had been carrying on in partnership a business, which had been assessed to income tax under the Indian Income tax Act of 1918 and the accounting year of which was a period of 12 months ending on the 30th June each year, transferred the business to a limited company on the 1st March, 1940, and claimed in the assessment for the year 1940 41 that under section 25 (4) of the Income tax Act, 1922, they were not liable to pay income tax on the income of their business from 1st July, 1938, up to 29th February, 1940, a period of 20 months.
The Income tax authorities were of the view that exemption could be claimed only 487 for the period from 1st July, 1939, to 29th February, 1940, a period of 8 months: Held, that the expression "end of the previous year" in sub sections (3) and (4) of section 25 in the context of those sub sections means the end of the accounting year (a period of full 12 months) expiring immediately preceding the date of discontinuance or succession and the assessee firm was entitled to claim exemption from tax only in respect of the period from the 1st July, 1939, to the 29th 'February,1940, On a true construction of sections 25 and 26, the Income tax Officer is not empowered to make an accelerated assessment in the year in which succession occurs on the profits of that year and prematurely assess the successor so that he , may be able to give relief to the person succeeded.
The exemption provided for in section 25 (4) and the apportionment mentioned in section 26 (2) have to be made in the assessment year in which the profits of the year of succession fall to be assessed under section 3 of the Act.
For the purposes of the charging sections of the Act the ex pression "previous year" is co related to a year of assessment immediately following it, but it is not necessarily wedded to an assessment year in all cases and it cannot be said that the expression "previous year" has no meaning unless it is used in relation to a financial year.
In a certain context it may well mean a completed accounting year immediately preceding the happening of a contingency.
|
Appeal No. 134 of 1951.
Appeal from the Judgment and Order dated 20th November, 1950, of the Labour Appellate Tribunal, Lucknow, in Appeal No. 10 of 1950.
Bakshi Tek Chand and Veda Vyasa (section B. Kapur, with them) for the appellants.
Shaukat Hussain for the respondent.
Bishen Singh for the intervener.
December 17.
The Judgment of the Court was delivered by DAS J.
This appeal has been filed with the special leave granted by this Court on May 10, 1951.
By the order granting such leave the appeal has been restricted to one point only, namely, " whether the Government of Uttar Pradesh had the power to extend the time for making the award ex post facto, i.e. after the time limit originally fixed therefore had expired.
There is no dispute as to the facts.
An industrial dispute having arisen between the appellant company and its employees, by Labour Department Notification No. 637 (ST)/XVIII 53 (ST)/50 dated February 18, 1950, the Governor of Uttar Pradesh was pleased, in exercise of the powers conferred by section 3 read with section 4 of the U. P. (U. P. Act No. XXVIII of 1947), to refer the said dispute to the Labour Commissioner.
U. P., or a Conciliation Officer of the State Government nominated by him for adjudication on seven several issues specified therein and to direct the adjudicator to conclude the adjudication proceedings and submit his award to the Government not later than April 5, 1950.
The Labour Commissioner by his letter No. I.M.R. 14 A nominated Shri M. P. Vidyarthi, Regional Conciliation Officer, U. P., as the adjudicator in the above dispute with a direction that be should submit his, award by March 25, 1950, and that if the proceeding, were not likely to be 441 completed within that time he should move the Government for extension of time at least a week before the specified date.
By Notification No. 897 (ST)/XVIII 53 (ST)/50 dated March 20, 1950, the Governor was pleased to order that the adjudicator should also adjudicate on an additional issue formulated therein.
By a further Notification No. 950 ' (ST)/XVIII 53 (ST)/60 dated March 24, 1950, the ,Governor was pleased to refer another additional issue for the decision of the adjudicator.
The adjudicator did not make his award on or before April 55 1950, as directed by the first order of reference but made his award on April 13, 1950, that is to say, 8 days after the expiry of the time originally fixed for the making of the award.
About thirteen days after.
the I delivery of the award Labour Department Notification No. 1247 (ST)/XVIII 53 (ST)/50 was issued on April 26, 1950, whereby the Governor was pleased, in exercise of powers conferred by section 3 read with section 4 of the 'Act, to allow the adjudicator in the said dispute to submit his award by April 30, 1950.
Thereafter by Notification No. 1447 (ST)/XVIII 53(ST)/50 dated August 1, 1950.
, the Governor was pleased, in exercise of powers conferred by section 6 (2) read with sections 3 and 4 of the Act, to order that the award be enforced for a period of six months from the date of that order in the first instance and thereafter for such further period as might be prescribed.
On August 17, 1950, the appellant company preferred an appeal against the award to the Labour Appellate Tribunal contending, inter alia, as follows: That the award dated April 13, 1950, is vitiated, having been given after the expiry of the time limit.
(a) In its order dated February 18, 1950, para.
(5), Government directed the adjudicator to conclude the proceedings and submit his award not later than the 5th April, 1950.
The award is dated 13th April, 1950.
The Government, however, tried to remedy 442 this defect by the issue of G.O. No. 1247 (ST) XVIII 53 (ST)/50 dated April 26, 1950, but under the law this is of no avail.
To be a valid extension of date granted to the adjudicator, Government ,.,order should have been issued before the 5th April, 1950, to keep the authority of the adjudicator alive.
"On the date the adjudicator made the award, i.e., 13th April, 1950, he had no power to make an award.
" The Appellate Tribunal by its decision given on November 20, 1950, dismissed the appeal with the following observations on the point mentioned above. " With regard to the last point our view is that as the Government had the authority under section 6 of the Act to fix time limit for submitting an award it had also the necessary and incidental power to extend the time limit originally fixed, if it considered it necessary.
The first proviso to section 3 empowers the Provincial Government to add more matters for adjudication.
It is obvious that additions to the matters already referred to would or may take more time than what had been originally estimated, and so ,it may lead to an impossible position if the Government had no power to extend the time originally fixed by it, and it makes no difference, in our opinion, whether the time is extended before or after the expiry of the time originally limited.
" The present appeal is against that decision of the Appellate Tribunal but limited to the question hareinbefore mentioned.
Dr. Tek Chand appearing in support of this appeal urges that the adjudicator derived his authority under the order made by Notification No. 637, dated February 18, 1950.
Section 6 (1) provides that the adjudicator " shall, within such time as may be specified, submit its award to the State Government.
" The time specified by the order was " not later than April 5, 1950.
" On the expiry of that time the adjudicator became functus officio and bad no power or authority to make the award.
It is true that two 448 more issues were, by the two subsequent orders, added to the list of issues to be determined by the adjudicator but those issues, Dr. Tek Chand submits, did not involve any detailed investigation into facts necessitating any further time for making the award.
Learned counsel contends that the U.P. Act under consideration has no provision empowering the State Government to enlarge the time for the making of ' the award by the adjudicator. 'In the circumstances, if the State Government took the view that the addition of those two issues would render the time ' specified in the original order inadequate for the purpose it should have cancelled the previous notification and issued a fresh notification referring all the issues to the adjudicator and specifying a fresh period of time within which he was to make his award. ' The State Government did not adopt that course.
What it purported to do was to extend the time for making the award not only after the time originally fixed had expired but also after the award had, actually been submitted.
The argument is that even assuming but not admitting that the State Government had the power to extend the time before the time had expired it certainly had no power to do so after the award had been made, for it was meaningless, urges Dr. Tek Chand, to extend the time to do an act which bad already been done.
He refers us to the decision of the Judicial Committee in Baja Har Narain Singh vs Chaudhrain Bhagwant Kuar(1) where it was held that under the Code of Civil Procedure of 1882 the Court had no power to extend the time for making the award after the award had been filed.
Section 514 of that Code enabled the Court to grant a further time and from time to time to enlarge the period for the delivery of the award but section 521 provided that no award shall be valid unless made within the period allowed by the Court.
Their Lordships of the Privy Council took the view that it would not have been competent for the Court to extend the time after the award had been made, for once the award was made (1) L.R. 18 I.A. 55; 13 All.
300 444 and delivered the power of the Court under section 514 was spent and that although the Court had the fullest power to enlarge the time under that section as long as the award was not completed it no longer possessed any such power when once the award was made.
in order to give full effect to section 521 the Judicial Committee had to confine the exercise of the power to extend the time given to the Court by section 514 to a point of time before the award had been made.
This decision was relied upon by Mr. Justice Harring ton sitting singly on the Original Side of the Calcutta High Court in Shib Krishna Dawn & Co. vs Satish Chander Dutt(1) which was a case governed by the Code of 1908.
The learned Judge overlooked the fact that paragraph 8 of the Second Schedule to the Code of 1908 which corresponded to section 514 of the Code of 1882 expressly conferred power on the Court to allow further time and from time to time, either before or after the expiration of the period fixed for the making of the award, to enlarge such period and that paragraph 15 which corresponded to section 521 of the Code of 1882 contained no provision that an award made out of time was ipso facto invalid and that consequently the reasoning underlying the decision of the Judicial Committee in the case of Raja Narain Singh vs Chaudhrain Bhagwant Kuar (2) had no application to the case before him, which was governed by the Code of 1908.
Having regard to the difference in the language of the relevant provisions of the two Codes, the correctness of the decision of Harrington J. was doubted by Mr. Justice Chitty also sitting singly on the Original Side of the Calcutta High Court in Sri Lal vs Arjun Das(3).
Eventually the, decision of Mr. Justice Harrington was dissented from by a Division Bench of the same High Court sitting in appeal from the Original Side in Jetha Lal Laxmi Chand Shah vs Amrita Lal Ojha(4), which held that the Court had power to enlarge the time for making the award even after the award had (1) I.L.R.38 Cal.
(3) (2) 18 I.A. 55.
(4) I.L R. ;42 C.W.N. 833.
445 actually been made.
The learned Judges in the last mentioned case referred to and relied on the case of Lord vs Lee(1).
Reference has also been made by learned counsel for the respondents to Dentron vs Strong (2) and toMay vs Harcourt (3).
It will be noticed that all those English cases were decided under section 15 of the Common Law Procedure Act, 1854 (17 & 18 Vic , c. 125).
It is true that in that English statute there was no provision similar to section 521 of our Code of 1882 which was noticed by the Privy Council in the case cited by Dr. Tek Chand; nevertheless section 15 of the English statute like section 514 of the Code of Civil Procedure of 1882 corresponding to paragraph 8 of the Second Schedule to the Civil Procedure Code of 1908 and like section 9 of the English Arbitration Act, 1889, corresponding to section 12 of the Indian Arbitration Act, 1899, empowered the Court, from time to time, to enlarge the time for making the award.
There is a similar provision for enlargement of time in section 148 of our Civil Procedure Code of 1908.
There is, however, no similar provision in the U. P.
Section 6(1) of that Act peremptorily requires the adjudicator to submit his award to the State Government " within such time as may be specified " and not "within such time as may from time to time be specified.
" It is significant that the only occasion when the State Government can, under the U. P. Act, specify a fresh period of time is when it remits the award for reconsideration under sub section (2) of section 6, for under subsection (3) the adjudicator is enjoined to submit his award, after reconsideration, within such period as may be specified by the State Government.
Even in this case, under section 6(2) and (3) the State Government may in the order remitting the award specify a time within which the award, after reconsideration, must be filed.
This gives power to the State Government to fix a fresh period of time to do a fresh (1) (2) (1874) L. R. 9 Q.B. 11 7, (3) I.P.R. 13 Q. B.D. 688, 446 act, namely, to reconsider and file the reconsidered award.
It does not give the State Government any power to enlarge the time fixed originally for the initial making of the award.
Therefore, except where ,the State Government under section 6 (2)remits the 'award for reconsideration it has no power even to specify a fresh period of time and much less a power to extend the time for the initial making of the award under section 6 (1).
In exercise of the powers conferred by clauses (b), (c), (d) and (g) of section 3 and section 8 of the U. P. , the Governor was pleased to make an order embodied in Notification No. 615 (LL)/XVIII 7 (LL) 1951, dated March 15, 1951.
The proviso to rule 16 of that order authorised the State Government to extend from time to time the period within which the Tribunal or the adjudicator was to pronounce the decision.
These rules were, however, not in force at the time material to the case before us.
Learned counsel appearing for the respondent and for the State of Uttar Pradesh have not referred us to any similar rule which, was in force in 1950.
In view of the language of section 6 of the U. P. Act and in the absence of a rule like the proviso to rule 16 referred to above it must follow that the State Government had no authority whatever to extend the time and the adjudicator became functus officio on the expiry of the time specified in the original order of reference and, therefore, the award which had not been made within that time must be held to be without jurisdiction and a nullity as contended by Dr. Tek Chand.
Learned counsel for the respondents refers us to the provisions of section 14 of the U. P. General Clauses Act, 1904, which provides that where by any Uttar Pradesh Act any power is conferred on the State Government then that power may be exercised from time to time as occasion requires.
Sections 3 and 4 of the U. P. , certainly confer power on the State Government to refer disputes to an adjudicator for decision 447 and section 6 (1) may be read as empowering the State Government to specify the time within which the adjudicator to whom an industrial dispute is referred for adjudication is to submit his award.
The combined effect of section 14 of the U. P. General Clauses Act and section 6(1) of the U. P. , it is contended, is that the adjudicator is enjoined to submit his report "within such time as may from time to time be specified " and that this being the position, the principles laid down in the English decisions referred to above must be held to be applicable to the present case.
We are unable to accept this line of reasoning.
Under section 14 of the U. P. General Clauses Act the State Government may exercise the power conferred on it by sections 3, 4 and 6, that is to say, it can from time to time make orders referring disputes to an adjudicator and, whenever such an order of reference is made, to specify the time within which the award is to be made.
This power to specify the time does not and indeed cannot include a power to extend the time already specified in an earlier order.
The legislative practice, as evidenced by the provisions of the different statutes referred to above, is to expressly confer the power of extension of time, if and when the legislature thinks fit to do so.
There is no question of any inherent power of the Court and much less of the Executive Government in this behalf.
Section 14 of the U. P. General Clauses Act does not in terms, or by necessary implication, give any such power of extension of time to the State Government and, therefore, the Respondents can derive no support from that section.
Learned advocate for the Intervener, the State of Uttar Pradesh, draws our attention to section 21 of the U. P. General Clauses Act, 1904, and contends that the order of April 26, 1950, should be taken as an amendment or modification, within the meaning of that section, of the first order of February 18, 1950.
It is true that the order of April 26, 1950, does ex facie purport to rectify, the order of 448 February 18, 1950, but, in view of the absence of any distinct provision in section 21 that the power of amendment and modification conferred on the Government may be so exercised as to have retrospective operation the order of April 26, 1950, viewed merely as an order of amendment or modification, cannot, by virtue of section 21, have that effect.
If, therefore, the amending order operates prospectively, i.e., only as from the date of the order, it cannot validate the award which bad been made after the expiry of the time specified in the original order and before the date, of the amending order, during which period the adjudicator was functus officio and had no jurisdiction to act at all.
We do not think the respondents can derive any support from section 21 of the U. P. General Clauses Act.
The result, therefore is that this appeal must be allowed and the award must be declared to be null .and void and we order accordingly.
In the circumstances of this case we make no order as to costs.
Appeal allowed.
Agent for the intervener: C. P. Lal.
| On February 18,1950, the Governor of Uttar Pradesh referred an industrial dispute to the Labour Commissioner or a person nominated by him with the direction that the award should be submitted not later than April 5, 1950.
The award, however, was made on April 13, and on April 26, the Governor issued a notification extending the time for making the award up to April 30: Held, (i) in view of the language of section 6 of the U. P. , and in the absence of a provision like that contained in the proviso to r. 16 of the Governor 's notification dated in March 15, 1951, the State Government had no authority whatever to extend the time, and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was therefore one made without jurisdiction and a nullity.
(ii)Section 14 of the U. P. General Clauses Act, 1904, did not in terms or by necessary implication give any such power of extension of time to the State Government.
(iii)Though the order of April 26 did exfacie purport to modify the order of February 18, in view of the absence of any distinct provision in section 21 of the U. P. General Clauses Act, 1904, that the power of amendment and modification conferred on the State Government may be so exercised as to have retrospective operation, the order of April 26, viewed merely as an order of amendment or modification, cannot, by virtue of section 21, have retrospective effect.
Raja Har Narain Singh vs Chaudhrain Bhagwant Kuar (L.R. 18 I.A. 55) applied.
Jetha Lal Lakshmi Chand Shah vs Amrita Lal Ojha (I.L.R. , Lord vs Lee (L.R. 3 Q.B. 404), Dentron vs Strong (L.R. 9 Q.B. 117), May vs Harcourt (L.R. 13 Q.B.D, 688) distinguished.
57 440
|
No. 1 1 of 1952.
Appeal from the Judgment and Order dated January 18, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 25 of 1947.
O.T.G. Nambiar (Samarendra Nath Mukherjee, with him I for the appellant.
M. C. Setalvad, Attorney General for India, and C. K Daphtary, Solicitor General for India (G. N. Joshi and P.A. Mehta, with them) for the respondent.
December 22.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal from the judgment and order of the High Court of Judicature at Madras upon a reference made by the Income tax Appellate Tribunal under section 66(1) of the Indian Incometax Act, 1922.
The appellant company, the assessee, is incorporated in the United Kingdom under the English Companies Act and has it registered office in London.
It owns a spinning and weaving mill at Pondicherry in French India where it manufactures yarn and cloth.
Messrs. Best and Co. Ltd., Madras, have been appointed 525 the agents of the assessee under an agreement dated, the 11th July, 1939, and have been invested with full powers in connection with the business of the assessee in the matter of purchasing stock, signing bills and other negotiable instruments and receipts and settling, compounding or compromising any claim by or against the assessee.
The yarn and cotton manufactured in Pondicherry were sold mostly in British India and partly outside British India.
In the accounting year 1941 and 1942 all the contracts in respect of the sales in British India were entered into in British India and the deliveries were made and payments received in British India.
In regard to the sales outside British India also, payments in respect of such sales were received in Madras through the said agents.
The total sales of the goods in the assessment year 1942 43 were Rs. 69,69,145 and for the assessment year 1943 44 were Rs. 93,48,822.
The value of the sales in British India amounted to Rs. 57,07,431 for the assessment year 1942 43 and to Rs. 67,98,356 for the assessment year 1943 44.
The value of the total sales outside British India amounted to Rs. 12,61,714 for the year 1942 43 and Rs. 25,50,472 for the year 1943 44.
Out of the said amounts received in respect of the foreign sales the amounts received in British India were Rs. 9,62,434 for 1942 43 and Rs. 75,230 for 1943 44 and the amounts received outside British India were Rs. 2,99,280 for 1942 43 and Rs. 24,75,242 for 1943 44.
On these facts the Income tax Officer found that the assessee was resident in British India within the meaning of section 4 A (c) (b) of the Act by reason of its income arising in British India in the year of account exceeding its income arising without British India and on that basis he assessed the company for the two assessment years 1942 43 and 1943 44 as resident in British India on the profits and gains which had accrued to the company both within and without British India under section 4 (1) (b) (i) and (ii) of the Act.
The order of the Income tax Officer was confirmed by the Appellate Assistant Commissioner and, the order 526 of the Appellate Assistant Commissioner was confirmed by the Appellate Tribunal on the 15th May, 1946.
The assessee applied to the Appellate Tribunal under section 66 (1) of the Act for reference to the High Court of certain questions of law arising out of its order.
The, Commissioner of Income tax in his reply suggested the following two questions for reference (1)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that section 42 (1) and (3) of the Income tax Act has no application to income accruing or arising to the assessee company in British India or to income received by it in British India during the previous year?" " (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire income of the assessee company during the accounting year ended 31st December, 1941, was assessable under section 4(1) of the Incometax Act, and that no portion of such in come was entitled to be exempted under section 42(3) of the Act ? The Appellate Tribunal however referred the following questions to the High Court: " (1) Whether on the facts and in the circumstances of the case, section 42 (1) and (3) of the Act alone and not section 4 of the Act have application to the income accruing or arising to the assessee company in British India and to the income attributable to the sale proceeds received by it in British India during the previous year?" " (2) Whether on the facts and in the circumstances of this case the entire profits and gains arising to the assessee company in British India should be taken into account for the purpose of applying the test laid down under section 4 A (c) (b) or only that part of the profits which should be determined after the application of sectioin 42(3) of the Act as reasonably be attributable to that part of the operations carried on in British India ?" and " (3) Whether on the facts and in the circumstances ' of the case, the provisions.
of the Indian Income tax 527 Act contained in section 4 (1) with the subsections and section 4 A (c) (b) are not ultra vires in so far as they seek to assess foreign income of the company registered outside British India ?" The third question was concluded by the decision of their Lordships of the Privy Council in the case of Wallace Bros. & Co. Ltd. (1) and was therefore not argued before the High Court and the High Court answered it by stating that the provisions of section 4 (1) and section 4 A (c) (b) of the Act were not ultra vires the Indian Legislature.
The question No. (1) was further amended by agreement between the learned counsel for the revenue authority and the assessee and it was reframed as under: " (1) Whether on the facts and in the circumstances of the case section 42 (1) and (3) of the Act alone and not section 4 of the Act have application to the income accruing or arising by reason of sales in British India of manufactured goods where the manufacturing process took place outside British India?" The question (2) was retained in the form in which it had been referred by the Appellate Tribunal.
Both these questions were answered against the assessee by the High Court.
The assessee obtained the necessary certificate from the High Court for leave to appeal to this court and hence this appeal.
It may be observed that in reply to the. notice under sections 22(2) and 38 of the Act for the assessment year 1942 43 the agents of the assessee had on the 1st June, 1943, submitted a return under protest and had claimed that the income shown in the return should be apportioned under section 42(3) of the Act as between the operations carried on in British India and operations carried on outside British India.
They had further declared that the company was non resident in British India during the previous year for which the return was made.
In the statement enclosed therewith the total world income for the year ended 31st December, 1941, had been shown at Rs. 10,23,907.
Profit at 10 per cent.
on British Indian sales which (1) (1948) 76 I.A. 86.
528 aggregated to Rs. 57,07,431 was shown at Rs. 5,70,743 and after deduction of the proportionate expenses relating to sales in British India and sundry charges was put down at the net figure of Rs. 4,58,026 which was shown as the British Indian income.
It was thus contended that the income arising in British India in the year of account did not exceed its income arising without British India and that therefore the assessee was non resident in British India.
This calculation of profits at the rate of 10 per cent.
on British Indian sales did not make any allocation between manufacturing profits and merchanting profits and all the profits arising out of British Indian sales were shown in one lump sum.
The Income tax Officer took it as settled law that the profits arose in the country in which the sales took place and as the bulk of the sales had taken place in British India the bulk of the profits accrued or arose in British India.
He held that the provisions of section 42(3) would apply only where the profits arose outside British India but which by virtue of section 42(1) were deemed to accrue or arise in British India, and that it did not apply where the profits actually arose in British India by the sale of goods in British India.
He therefore held that the entire profits on "Sales made in British India actually arose in British India and were liable to tax under section 4 (1) (c).
On a calculation of the figures he came to the conclusion that the income of the assessee arising in British India in the accounting year exceeded its income arising without British India and that the assessee was resident in British India under section 4 A(c).
The assessee was also held ordinarily resident in British India under section 4 B(c) and he assessed the company accordingly on that basis.
The Appellate Assistant Commissioner also proceeded on that basis and confirmed the order of the Income tax Officer.
He was however further of the opinion that the entire profits were received where the sale pro ceeds were received and the assessee was therefore.
liable to tax under section 4(1)(a) also.
This conclusion was arrived at by him relying upon two decisions of their Lordships of the Privy Council: (1) 529 Pondicherry Railway Company V. Commissioner of Income tax, Madras(1) and Commissioner of Income tax, Madras vs Diwan Bahadur Mathias(2), in the first of which at page 369 Lord Macmillan observed as follows : Their Lordships accordingly are of the opinion that the income derived by the Pondicherry Railway Company from the payment made to them by the South Indian Railway Company is on the facts stated received in British India within the meaning of the Act by the Agent of the Pondicherry Railway Company there on their behalf " It is unnecessary to go on to consider whether the business is carried on in British India, which is the form which question (c) takes, for it is enough if the profits of a business carried on by the assessee are received in British India and the place where the business is carried on is not material.
" The Appellate Tribunal adverted to the fact that the whole income of the company, so far as 1942 43 is concerned was received in British India and so far as 1943 44 is concerned a major part of it in this way was received in British India, but did not base its decision on this aspect of the case.
It held that the scope of section 42(3) was circumscribed by confinement to those cases where profits were deemed to accrue or arise under section 42 alone and there was no warrant for extending the principle of apportionment to other cases where the profits and gains were made taxable under other sections of the Act.
It also held that section 42 dealt with " deemed " income whereas section 4 A (c) dealt with income that arose in British India.
Therefore, it could not be said that for the purpose of section 4 A (c) a proportionate "deemed " income should be taken as income that arose in British India.
When the application for reference was made to the Appellate Tribunal the Commissioner of Income tax in the question (1) which he suggested included within its ambit this aspect of the income having been received by the assessee in British India during the previous year.
But when the Appellate Tribunal refrained the question (1) it merely (1) (2) [1939] 7 I.T.R 48.
530 confined it to income accruing and arising to the assessee in British India and to the income attributable to the sale proceeds received by it in British India during the previous year.
The question (1) as finally framed by the High Court adverted to the income accruing or arising by reason of sales in British India on manufactured goods where manufacturing process took place outside British India and the aspect of the income having been received by the assessee in British India was absolutely ignored.
When the questions were originally referred to the High Court the position in law as then understood was that profits arose in the country in which the sales took place.
This position was however negatived, particularly in the case of manufacturing businesses, in a decision of this court.
in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1).
After hearing at considerable length the arguments urged before us on behalf of the assessee as well as the Income tax authorities we feel that in view of that decision the questions framed by the Tribunal and the High Court do not bring out the real point in controversy between the parties and it is agreed that the following two questions truly represent I and bring out the matter on which the parties are at issue.
We therefore resettle the questions originally framed and reframe them as below: (1) Whether in view of the finding of fact in this case that the entire profits were received in India and the company is liable to tax under section 4 (1) (a) of the Act, the provisions of section 42(1) have any relevancy ? (2) Can the income received in India be said to arise in India within the meaning of section 4 A(c)(b) of the Act ? If not, should only those profits determined under section 42(3) as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4 A (c) (b) ? (1) ; ; 18 I.T.R. 472.
531 The case is remanded to the High Court with the direction that it should give its opinion on, these two questions and submit the case to this court within three months.
section N. Mukherjee, for the appellant.
Porus A. Mehta, for the respondent.
December 8.
BHAGWATI J.
By our judgment dated the 22nd December, 1952, we reframed the questions as below: (1) Whether in view of the finding of fact, in this case that the entire profits were received in India and the company is liable to tax under section 4 (1) (a) of the Act, the provisions of section 42 (1) have any relevancy; (2) Can the income received in India be said to arise in India within the meaning of section 4A (c) (b) of the Act ? If not, should only those profits determined under section 42 (3) as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A (c) (b), and remanded the case to the High Court with the direction that it should give its opinion on these two questions.
The High Court has accordingly considered these two questions which were referred to it for opinion and has answered the question No. I in the negative and against the assessee and question No. 2 in the manner following, i.e., the income received in British India cannot be said to wholly arise in India within the meaning of section 4A (c) (b) of the Act and that there should be allocation of the income between the various profit producing operations of the business of the company in the light of the principle contained in the judgments in Ahmedbhai Umarbhai 's case(1) and in Anglo French Textile Company vs Income tax Commissioner(2) relating to the same assessee.
When the matter came up for further arguments before us on this opinion of the High Court,Shri section N. Mukherjee, the learned counsel for the appellant (1) (1950] 18 I.T.R. 472, (2) A.I.R, 70 532 did not contest the correctness of the answer to question No. I in view of the decision of this court in Turner Morrison & Co., Ltd. vs Commissioner of Incometax, West Bengal(1).
It may be noted that even before the High Court the learned counsel appearing for both the parties agreed that the matter was concluded by this decision against the assessee and question No. I was answered accordingly by the High Court.
In regard to the question No. 2 however Shri Porus A. Mehta, learned counsel for the respondent, contended before us that the matter was not concluded by the judgment of the majority in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1) and that the High Court was wrong in the answer which it gave to this question.
He contended that the decision in the case of Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay("), turned on the statutory provisions of the Excess Profits Tax Act read with section 42 (3) of the Indian Income tax Act which was expressly incorporated therein by virtue of section 21 of the Act and not on any general principles of apportion.
ment of income, profits or gains enunciated therein.
He took us in extensover the portions of the majority judgments and tried to demonstrate that the decision there was based purely on the applicability of section 42 (3) of the Indian Income tax Act, but for the applicability of which, according to his submission, there was no room for the apportionment of the income, profits or gains of the business, in the manner contended by the appellant.
We do not accept this contention of the respondent.
Section 4A(c) (b) is concerned with the income arising in the taxable territories in a particular year exceeding the income arising without the taxable territories in that year and the very words of the section are capable of being construed as also contemplating a state of affairs where there may have to be a division or apportionment between the income arising in the taxable territories and the income arising without the taxable territories (1) (2) ; 533 in the particular year.
The whole of the argument urged before us on behalf of the respondent was aimed at establishing that the scheme of the Indian Income tax Act was not to tax the source of income but the income, profits or gains from whatever source derived which were received or were deemed to be received in the taxable territories or which accrued or arose or were deemed to accrue or arise in the taxable territories during the particular year and that it was immaterial whether the income, profits or gains were derived from business operations carried on in the taxable territories or without the taxable territories.
This argument was possible when the decisions which held that income, profits or gains arose or accrued at the places where the sales took place were good law, because then there was no question of apportionment of income, profits or gains arising from the business operations carried on in the taxable territories 'and income, profits or gains arising from the business operations carried on without the taxable territories.
The moment however it was held, as it was done in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1), that though profits may not be realised until a manufactured article was sold profits were not wholly made by the act of sale and did not necessarily accrue at the place of sale and to the extent profits were attributable to the manufacturing operations profits accrued at the place where business operations were carried on, these decisions went by the board.
The question whether a particular part of the income, profits or gains arose or accrued within the taxable territories or without the taxable territories would have to be decided having regard to the general principles as to where the income, profits or gains could be said to arise or accrue.
Section 42 of the Indian Income tax Act has no relevance to the determination of this question because it is mainly concerned with income Which is deemed to have arisen, or accrued and not with income which actually arises or.
accrues within the taxable Territories.
Section 42 (3) also is a part of the ' scheme which is enacted in section 42 and cannot help (1) (1950)S.C.R. 335.
534 in the determination of the question before us As a matter of fact the use of the words "under section 42(3)" used in the question No. 2 as reframed by us was not appropriate and the only question which should have been sent to the High Court was "If not, should only those profits determined as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A (c) (b).
" If, therefore, section 42(3) has nothing to do with the determination of the income arising in the taxable territories as distinguished from the income arising without the taxable territories as understood in section 4A(c) (b) of the Act what we have got to consider is whether there is anything in the Act which prevents the application of the general principle of apportionment of income, profits or gains between those which are derived from business operations carried on within the taxable territories and those which are derived from business operations carried on without the taxable territories.
The contention which was advanced by Shri Porus A. Mehta on behalf of the respondents in this behalf, viz., that the word ,arise " was the only word used in section 4A (c) (b) and the word "accrue" did not find any place therein, that there was a distinction between the conception of arising and the conception of accrual and that the apportionment of the income was appropriate only in cases where the income arose and was inappropriate in cases where the income accrued, was sufficiently repelled in the judgment in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai &.Co., Bombay(1), where it was observed: " Whether the words 'derive ' and 'Produce ' are or are not synonymous with the words 'accrue ' or arise it can be said without hesitation that the words 'accrue ' or " arise ' though not defined in the Act are certainly synonymous and are used in the sense of 'bridging, in as a natural result '.
Strictly speaking, the word 'accrue ' is not synonymous with 'arise ', the former connoting idea of growth or accumulation and the (1) ; at p. 364.
535 latter of the growth or accumulation with a tangible shape so as to be receivable.
There is a distinction in the dictionary meaning of these words, but throughout the Act they seem to denote the same idea or ideas very similar and the difference only lies in this that one is more appropriate when applied to a particular case.
In the case of a composite business, i.e., in the case of a person who is carrying on a number of businesses, it is always difficult to decide as to the place of the accrual of profits and their apportionment inter se.
For instance, where a person carries on manufacture, sale, export and import, it is not possible to say that the place where the profits accrue to him is the place of sale.
The profits received relate firstly to his business as a manufacturer, secondly to his trading operations, and thirdly to his business of import and export.
Profit or loss has to be apportioned between these businesses in a businesslike manner and according to well established principles of accountancy.
In such cases it will be doing no violence to the meaning of the words accrue ' or 'arise ' if the profits attributable to the manufacturing business are said to arise or accrue at the place where the manufacture is being done and the profits which arise by reason of the sale are said to arise at the place where the sales are made and the profits in respect of the import and export business are said to arise at the place where the business is conducted.
This apportionment of profits between a number of businesses which are carried on by the same person at different places determines a so the place of the accrual of profits.
" The phraseology of section 42(3) of the Act 'also repels the contention in so far as the profits and gains of the business which are referred to therein and which are capable of apportionment as therein mentioned are deemed to accrue or arise in the taxable territories thus using the words "accrue" and "arise" as synonymous with each other.
The above passage is also sufficient in our opinion to establish that the apportionment of income, or gains between those arising from business opinion 536 carried on in the taxable territories and those arising from business operations carried on without the taxable territories is based not on the applicability of section 42(3) of the Act but on general principles of apportionment of income, profits or gains.
That was really the ratio of the judgment of the majority in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1), and any attempt to distinguish that 'ease from the present one by having resort to the statutory provisions of the Excess Profits Tax Act is really futile.
We are accordingly of the opinion that the answer given by the High Court to the question No. 2 also was correct.
The appeal before us will accordingly be allowed and the answers to the questions Nos. 1 and 2 refrained by us will be as under: Question No. 1 In the negative; and Question No. 2 The income received in British India cannot be said to wholly arise in India within the meaning of section 4A (c) (b) of the Act and that there should be allocation of the income between the various business operations of the assessee company demarcating the income arising in the taxable territories in the particular year from the income arising without the taxable territories in that year for the purposes of section 4A (c) (b) of the Act.
In so far as the appellant has failed in one part of the case and succeeded in another part we think that the proper order for cost should be that each party bears and pays his own costs of this appeal including ,the costs of the remand before the High Court.
Appeal allowed.
| The assessee, a company incorporated in the United Kingdom and having its registered office in London, manufactured yarn and cloth in their,mill at Pondicherry.
The assessee had appointed another company in Madras as their agents.
The manufactured goods were sold mostly in British India and partly outside British India.
All the contracts in respect of the sales in British India: were entered into in British India and deliveries were made and payments were received in British India.
In regard to sales outside British India also, payments were received in Madras 69 524 through the agents and it was found as a fact that, the entire profits were received in India: Held, (i) that in view of the finding of fact that the entire profits were received in India and the assessee was liable to tax under section 4 (1) (a), the provisions of section 42 (1) had no relevancy ; (ii)that the income received in British India could not be said to wholly arise in British India within the meaning of section 4A (c) (b) and that there should be allocation of the income between the various business operations of the assessee demarcating the income arising in the taxable territories in the particular year from the income arising without the taxable territories in that year for the purposes of section 4A (c) (b) of the Act.
Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co. ([1950] S.C.R. 335), Pondicherry Railway Company vs Commissioner of Income tax, Madras [1931] (58 I.A. 239), Turner Morrison and Co. vs Commissioner of Income tax [1951] (19 I.T.R. 451 ; , referred to.
|
Appeal No. 13 of 1952.
Appeal from the Judgment and Order dated 18th January, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanaths Sastri JJ.) in Case Referred No. 28 of 1947.
O. T. G. Nambiar (section N. Mukherjee, with him) for the appellant.
M. C. Setalvad, Attorney General of India, and C.K. Daphtary, Solicitor General for India (G. N. Joshi and P. A. Mehta, with them) for the respondent.
December 22.
The Judgment of the Court was delivered by BOSE J.
The following question was referred to the High Court of Madras by the Income tax Appellate Tribunal under section 66 (1) of the Indian Income tax Act, 1922 Whether on the facts and in the circumstances of the case when an assessment has been made under section 23 (1) of the Indian Income tax Act, determining the assessee company 's income as 'nil ' and when proceedings under section 34 were subsequently started to assess the income which the 450 Income tax Officer believed to have escaped assessment the assessee company is entitled to claim that the loss of profits and gains (including depreciation allowance) sustained by it in the previous year should be determined in the course of such proceedings.
" We are concerned in this case with the assessment year 1941 42.
The assessee is the Anglo French Textile Company, a company which is incorporated in the United Kingdom.
It owns spinning and weaving mills at Pondicherry in French India and manufactures yarn and cloth there.
The raw materials necessary for the manufacture, or at any rate much of it, such as cotton, used to be purchased in what was then the British India, through its agents Best & Company Ltd. of Madras.
The bulk of its manufactured goods 'was ' also sold in British India, the rest being sold elsewhere.
But in the year material to this case it did no business in British India and accordingly it submitted no return to the Income tax authorities.
On 26th April, 1941, the Income tax Officer issued a notice to the assessee and called for a return.
The assessee replied on 9th June, 1941, that it had ",at all times material to the assessment year no business in British India " and consequently no profits arose or accrued or were received in British India and therefore the assessee "was not liable to comply with the provisions of the Indian.
Income tax Act.
" The assessee added.
In the Circumstances the company is not liable to make a return but with a view to preserve the right of the company to appeal against any order that may be passed by you, if necessary, we submit herewith without prejudice a nil return receipt of which kindly acknowledge.
" Appended to the letter was a piece of paper which has been called a " nil" return.
It is the usual printed form in which returns are, normally made but the only entry.in the whole form is the word " nil The following declaration was also added: 451 "I further declare that the company was not resident in British India during the previous year etc. " On 25th March, 1942, the Income tax Officer made the following order which he called an Assessment Order: "The company made a nil return of income obviously for the reason that it is not carrying on any business in British India .
I accept the return of income filed by the company and declare it is not liable to tax for the year 1941 42.
" A year later, namely, on 9th March, 1943, the Income tax Officer sent the assessee a notice under section 34 (1) (b) in the following terms: Whereas in consequence of the definite information which has come into my possession I have discovered that your income assessable to income tax for the year ending 31st March, 1942 has (a) escaped assessment.
I therefore propose to assess the said income that has (a) escaped assessment.
I hereby require you to deliver to me not later than . a return in the attached form of your total income and total world income assessable for the said year. " In reply to this the assessee again submitted the same CC nil " return and filed a statement showing a loss of Rs. 3,92,357 on its total world income.
This was on 31st May, 1944.
The Income tax Officer passed orders on this on 2nd June, 1944.
He stated that the assessee was a non resident company and that during the year no sales were effected in British India and concluded as follows: As the net result for the world business is only a loss, there can be no question of profits attributable 452 co operations in British India under section 42 (1) and 42 (3) in respect of cotton purchases.
The nil ' return filed is therefore accepted, Hence there is no assessment for 1941 42.
As this is a non resident company, the loss need not be carried forward under section 24 (2) as that section in terms does not apply to non residents.
" The last portion of the order is the one which occasions the assessee 'B grievance.
It claims that the Income tax Officer having accepted its statement of loss was bound to record it and carry it forward.
Appeals followed to the Appellate Assistant Commissioner of Income tax and the Income tax Appellate Tribunal and ultimately there was a reference to the High Court.
The assessee has failed throughout.and now appeals here.
The assessee 's contention is based on the following provision of section 34.
The first sub section states that when a notice is issued under that section the Income tax Officer may proceed to assess or re assess such income, profits or gains or recompute the loss or depreciation allowance and that " the provisions of this Act shall, so far as may be, apply, accordingly as if the notice were a notice issued under [sub section (2) of section 22].
" This it is said attracts section 24 (2).
We need not decide whether this contention is well founded, namely, whether the assessee can claim to reopen the proceedings, because, even if he can, we are of opinion that he cannot get what he asks for.
There is no provision in the Act which entitles the assesses to have a loss recorded or computed, unless something is to be done with the loss.
Thus, under section 24 (1) a loss can be set off against an income, profit or gain and under sub section (2) the balance of a loss can be carried forward to a following year on the conditions set out there.
Except for this there is nothing else that can be called in aid.
But under ' sub section (2) the loss can be carried forward when 453 "the loss cannot be wholly set.
off under subsection (1) and in that event only the "portion not so set off " can be carried forward.
We are therefore.
thrown back o sub section (1).
Sub section (1) provides that where an assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6 he shall be entitled to have the amount of the loss " set off against his income, profits or gains under any other head in that year." Therefore, before any question of set off can arise, there must be (1) a loss under one or more of the heads mentioned in section 6, and (2) an income, profit or gain under some other head.
It follows that when there is no income under any head at all, there is nothing against which the loss can be set off in that year and unless that can be done sub section (2) does not come into play.
Next, a set off Under section 24 (1) can only be claimed when the loss arises under one head and the profit against which it is sought to be set off arises under a different head.
When the two arise under the same head, of course the loss can be deducted but that is done under section 10 and not under section 24 (1).
See the decision of the Privy Council in Rm.
Arunachalam Chettiar vs Commissioner of Income tax, Madras (1).
In the present case, the loss is computed by striking a balance in the profit and loss account of just the one business and con sequently no question of different heads arises.
On both these grounds, therefore, the assessee 's contention must fail because, unless the loss can be set off under sub section (1) of section 24, it cannot be carried forward under sub section (2) and if it cannot be carried forward the question of its determination and computation becomes irrelevant.
The High Court proceeds on the ground that when proceedings are taken under section 34 the assesses (1) at 178 and 179.
454 is not entitled to reopen the whole proceedings as the further proceedings are limited to assessing that portion of the income which has escaped assessment.
We need not express any opinion on this.
The question we have to answer is confined to the facts and circumstances of this case and those circumstances are (1) that no return was filed at any stage of the case disclosing any income, profits or gains at all, (2) that proceedings were later taken under section 34, and (3) in the course of these proceedings the assessee claimed that a certain loss should be determined and recorded.
Our answer is that cannot be done for the reasons we have given and that consequently the question referred was rightly answered in the negative by the High Court.
The appeal fails and is dismissed with costs.
Appeal dismissed.
| An assessee submitted a return showing the income as "nil" and this return was accepted by the Income tax Officer, In the 449 next year the Income tax Officer sent a notice to the assessee under section 34 (1) (b) calling for a fresh return,.
, The assesses submitted a return showing the income as nil " and a loss of Rs. 3,92,357 and claimed that the loss should be recorded and carried forward under section 24 (2) of the Income tax Act.
The loss was arrived at by striking a balance in the profit and loss account of just one business: Held, that the assessee was not entitled to 'have the loss determined and carried forward for two reasons, first, because when there is no income under any head at all there is nothing against which the loss can be set off in that year under section 24 (1) and unless that can be done sub section
(2) of section 24 does not come into play ; secondly, a set off under section 24 (2) can only be claimed when the loss arises under one head and the profit against which it is sought to be set off under a different head.
Quaere: Whether when proceedings are taken under section 34 for the assessment of income which has escaped assessment, the assesses is entitled to re open the whole proceedings.
|
l Appeal No. 96 of 1952.
Appeal from the Judgment and Order dated the 9th April, 1951, of the High Court of Judicature at Calcutta (Sen and Chunder JJ.) in Civil Rule No. 1038 of 1950 arising out of the Order dated the 4th July, 1960, of the Court of the 6th Judge, Presidency Small Causes Court, Calcutta, in Ejectment Suit No. 6571 of 1949.
Arun Kumar Dutta and, Shivdas Ghosh for the appellant.
Panchanan Ghose (section P. Ghose, with him) for the respondent.
January 29.
The Judgment of the Court was delivered by DAS J.
This appeal is directed against the judgment and order of a Bench of the Calcutta High Court passed on the 9th April, 1961, in Civil Rule No. 1038 of 1950.
The facts leading up to this appeal may be shortly stated as follows : The respondents were, according to the appellant, monthly tenants under the appellant in respect of three rooms, one kitchen, one privy and a bathroom on the ground floor of premises No. 6, Roy Began 535 Street, Calcutta, at a monthly rent of Rs. 25 payable according to the Bengali calendar month.
On the 29th Baisakh 1356 B. section the appellant gave notice to the respondents to quit the premises on or before the 7th Jaistha 1356 B.S.
The respondents having failed to comply with the notice the appellant on the 1st June, 1949, instituted proceedings under Chapter VII of the , for the eviction of the respondents from the demised premises on the allegation that the tenancy had determined ipso fact,) for nonpayment of rent for three consecutive months in terms of section 12 (3) of the West Bengal Premises Rent Control Act, 1948.
The respondents on the 6th July, 1949, deposited into Court Rs. 233 7 0 and on the 8th July, 1949, entered appearance and filed a written statement denying that they were in arrears with their rent or that their tenancy , had been ipso facto determined.
The said proceedings came up for hearing on the 27th February, 1950, and the respondents not having appeared it was heard ex parte and an order was made directing the delivery of possession of the premises to the appellant on the 3rd May, 1950.
In the meantime on the 31st March, 1960, the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 (Act XVII of 1950) came into force.
On the 29th May, 1950, the respondents filed an application in the trial Court under section 18 of the said Act for vacating the order for possession.
On the 5th June, 1950, the trial Court made an order upon terms which, as set out in the respondents ' case, are as follows : "5 6 50.
On consent all arrears of rent up to Jaistha 1357 B.S. with interest at 9% p.a. along with the costs of the suit including half Pleader 's fee amounting to Rs. 399 3 0 on consent in total to be paid by the defendants to the plaintiff by 4 7 50.
The date fixed for payment and final orders.
All proceedings and execution stayed until further orders.
" The agreed amount having been paid the order for possession was vacated on the 4th July, 1950.
The 536 order as recorded in the order sheet reads as follows: "4 7 50.
Parties present as before.
Defendant carries out the order of the learned Court, dated 5th June, 1950.
Money deposited in Court as ordered.
Accordingly order of decree for possession is vacated.
Money in Court is allowed to be withdrawn by the plaintiff 's pleader under power.
" The appellant on the 1st August, 1950, moved the High Court under section 115 of the Code of Civil Procedure for setting aside the order of the trial Court passed on the 4th July, 1950.
While the application was pending before the High Court the West 'Bengal Premises Rent Control (Temporary Provisions) (Amendment) Act, 1950 (Act LXII of 1950) came into force on the 30th November, 1950.
On the 9th April, 1951, the High Court following an earlier decision of another Bench of that Court in Rai Bahadur Atulya Dhan Banerjee vs Sudhangsu Bhusan Dutta(1) dismissed the application.
On the 30th November, 1951, the High Court granted leave to the appellant to appeal to this Court and issued a certificate under the provisions of article 133 (1) (c) of the Constitution of India.
As already stated, the proceedings out of which the present appeal arises were instituted under Chapter VII of the .
Chapter VII of that Act which is intituled "Recovery of Possession of Immovable Property" allows the landlord, in certain circumstances, to "apply to the Small Cause Court for a summons against the occupant calling upon him to show cause on a day therein appointed why he should not be compelled to deliver up the property.
" Section 43 provides that if the occupant does not appear at the time appointed or show cause to the contrary, the applicant landlord shall, if the Court is satisfied that he is entitled to apply under section 41, be entitled to an order addressed to a Bailiff of the Court directing (1) 537 him to give possession of the property to the applicant on such date as the Court thinks fib to name in such order.
Although under the rules framed under the Act this application under section.
41 is initiated by a plaint there is no dispute that the proceeding is not a suit and the order for delivery of possession does not strictly speaking amount to a decree for recovery of possession [See Rai Meherbai Sorabji Master vs Pherozshaw Sorabji Gazdar(1)].
Indeed, section 1.9 of the Act peremptorily provides, inter alia, that the Small Causes Court shall have no jurisdiction in suits for recovery of immovable property.
The only question for consideration, therefore, is whether section 18(1) of Act XVII of 1950 applies to an order for possession made under section 43 of the .
Section 18(1) and the marginal note to that section run as follows: "18.
Where any decree for recovery of posses Power of court to sion of any premises has been made |rescind or vary on the ground of default in decrees and orders payment of arrears of rent under or to give relief in the provisions of the West Bengal pending suits in Premises Rent Control (Temporary, certain cases Provisions) Act, 1948,but the possession of such premises has not been recovered from the tenant, the tenant may apply to the trial Court within sixty days of the coming into force of this Act for vacating the decree for ejectment against him and within such period no order for delivery of possession shall be made by any Court, nor if an application is made by the tenant under this sub section till the application has been dismissed under sub section (4).
" In Rai Bahadur Atulya Dhan Banerjee vs Sudhangsu Bhusan Dutta it was held that the expression "decree for recovery of possession" in subsection (1) of section 18 includes an order for recovery of possession made under Chapter VII of the .
This case (1) BOM.
(2) 538 was followed, without further discussion, by different Benches of the same High Court in Dhanesh Prakash Pal vs Lalit Mohan Ghose (1), Mohon Lal Khettry v: Chuni Lal Khettry(2), Jethmull Sethia vs Aloke Ganguly (3) and also in the present case.
Finally, the question was again considered by a larger Bench of the Calcutta High Court in Iswari Prosad Goenka vs N. B. Sen(4).
The learned Judges agreed with the earlier decision in Rai Bahadur Atulya Dhan Banerjee vs Sudhangsu Bhusan Dutta (5).
After hearing the able arguments I advanced before us and giving the most anxious consideration to the decisions in the cases mentioned above we are unable to accept the conclusion arrived at by them in those, cases as correct.
Apart from the question whether the marginal note can at all be referred to in construing the provisions of a section of an Act, it is quite clear, on the authorities, that the marginal note cannot control the meaning of the body of the section if the language employed therein is clear and unambiguous.
If the language of the section is clear then it may be that there is an accidental slip in the marginal note rather than that the marginal note is correct and the accidental slip is in the body of the section itself.
Take for instance section 11 of the West Bengal Premises Rent Control Act, 1948.
The section says that notwithstanding anything contained in certain Acts specified therein, "no order or decree for the recovery of possession of any premises shall be made so long as the tenant pays to the full extent the rent allowable by this Act and performs the conditions of the tenancy.
" The marginal note to that section simply says: " No order for ejectment ordinarily to be made if rent paid at allowable rate." 'In the marginal note the words " or decree " do not find a place at all, a fact which clearly shows that the marginal note was ' not prepared carefully and that it was not a sure guide in the matter of the (1) (2) (I951) (3) (4) (5) 539 interpretation of the body of the section.
We have, therefore, to read the words used in the body of section 18(1) of the 195O Act and if we find the meaning clear and unambiguous ' the marginal note should not be permitted to create an ambiguity in the section.
Section 18 (1), as it stood on the 4th July, 1950, when the order for possession passed on the 27th February, 1950, was vacated, gave relief to a tenant against whom any decree for recovery of possession of any premises had been made on the ground of default in payment of arrears of rent under the provisions of the 1948 Act, provided that the possession of the premises had not been recovered from him.
The relief given by this section is clearly against a decree for possession which "has been made" under the 1948 Act.
The language of section 18 (1) of the 1950 Act and in particular the specific reference therein to the Act of 1948 take us back to that Act.
Section II of the 1948 Act %refers " to order or decree for the recovery of possession of, any premises".
The reference in the non obstante clause of section 11 to the , I 882, clearly indicates that the order for the recovery of possession refers to orders passed under section 43 of the last mentioned Act on applications made under section 41 thereof.
Section 11 speaks of both " order " for the recovery of possession and " decree " for the recovery of possession.
Therefore, there can remain no manner of doubt that the two words " order " and " decree " in section 11 connote two different things.
This is further made clear by the use of two words " suit " or " proceeding " in section 12 of the 1948 Act.
It is, thus, quite clear that in the 1948 Act " suit " is different from " proceeding" and " order " is different from " decree ".
Therefore, in construing the 1948 Act there can be no occasion for giving any extended meaning to the word " decree" so as to include "order", for the two are distinctly and separately provided for.
Section 18 (1) of Act XVII of 1950 does not refer to "decree" 70 540 simpliciter but to "any decree for recovery of possession of any premises on the ground of default in payment of arrears of rent under the provisions of" the 1948 Act.
Turning then to that Act we find that a decree for possession on the ground of non payment of rent under that Act is treated distinctly from an order for possession on the ground of non payment of rent under the same Act.
A decree for the recovery of possession within the meaning of that Act can, therefore, only mean a decree in a suit for recovery of possession and cannot cover an order for possession passed under section 43 on an application made under section 41 of the .
In short, section 18(1) of Act XVII of 1950 expressly attracts the 1948 Act and under that Act there can be no necessity for giving an extended meaning to the word "decree", for "order " is sepa rately dealt with in that Act.
It is said that whatever the word "decree" may mean in the 1948 Act it is immaterial for the purposes of construing Act XVII of 1950 for the Court has to ascertain the meaning of the word "decree" as used in section 18(1) of the last mentioned Act.
It has been already stated that the language of section 18 (1) attracts the relevant provisions of the 1948 Act and, therefore, the word "decree" occurring in section 18(1) must necessarily be construed in the light of the 1948 Act and it is clear that so construed it cannot cover "order" for possession made under Chapter VII of the .
Apart from ' that consideration, the question still remains: What does the word "decree" in section 18 (1) mean? That word has not been defined either in the 1948 Act or in Act XVII of 1950 or in the Bengal General Clauses Act.
That word, however, has been defined in the Code of Civil Procedure, 1908, and, as there defined, it means the formal expression of an adjudication which determines the rights of the parties with regard to the matter in controversy in the suit which last word prima facie means a civil proceeding initiated by a plaint (section 26 and Order IV, rule 1, 541 Civil Procedure Code).
This is the ordinary accepted meaning of the word " decree " and if that meaning is attributed to the word " decree " occurring in section 18(1) then clearly it cannot cover an order for possession passed under section 43 of the on an application made under section 41 of that Act.
It is, however, urged that the word " decree" in section 18 (1) of Act XVII of 1950 should not be read in its strict sense.
It is said that although the word "suit" ordinarily means a proceeding instituted by a plaint, it is also used in a wider sense so as to cover proceedings which are not instituted by a plaint and, therefore.
, an adjudication in those proceedings which are also suits in that extended meaning may well be said to be a " decree".
Reference is made to the explanation of sub section (1) of section 12 of Act XVII of 1950, which expressly provides that in the proviso to sub section (1) the term "suit" does not include proceeding under Chapter VII of the , and it is urged that this explanation inferentially means that the word " suit " occurring in the other sections of Act XVII of 1950 may include a proceeding under Chapter VII of the and, therefore, an order made on such a proceeding may be described as an adjudication in a suit and, therefore, a decree.
It is not quite clear how this inference, even if it can be properly drawn, can have any bearing on the construction of the word "decree" in sub section (1) of section 18 of the Act XVII of 1960 where the word " suit " is not used at all.
Be that as it may, the argument founded on the aforesaid inference sought to be drawn from the explanation to section 12 (1) of Act XVII of 1950 will clearly appear to be untenable when the provisions of that Act are closely scrutinised, for it will then be found that the word " suit" does not and was not intended to cover any proceeding under Chapter VII of the .
Section 12 (1) prohibits the making of any order or decree for the 542 recovery of possession by any Court, notwithstanding anything to the contrary in any other Act or law.
This sub section (1), standing by itself, means that no order for possession can be passed by the Presidency Small Cause Court notwithstanding the and no decree for possession can be made by any Court in any suit notwithstanding the Transfer of Property Act or the Contract Act or the Code of Civil Procedure, 1908.
The proviso to sub section (1), however, saves "any suit for decree for such recovery of possession" against certain tenants or in certain circumstances.
Therefore, it is clear that the proviso to sub section (1) of section 12 does not save proceedings under Chapter VII of the .
The explanation to that sub section stating that the word "suit" in the proviso does not include a proceeding under Chapter VII of the appears to have been inserted out of abundant caution to put the position beyond any doubt.
Section 16 of Act XVII of 1950 provides that notwithstanding anything contained in any other law a suit by a landlord against a tenant for recovery of possession of any premises to which the Act applies shall lie to the Courts as set out in Schedule B and that no other Court shall be competent to entertain or try such suit.
According to Schedule B, where the premises are situate on land wholly within the ordinary original civil jurisdiction of the Calcutta High Court and when the rent does not exceed Rs. 500 per month, the Chief Judge of the Calcutta Court of Small Causes shall entertain and try such suit as a Court of the District Judge, provided that be shall be entitled to transfer the suit to any other Judge of that Court who shall try it as a Court of the Subordinate Judge.
The result of sections 12 and 16 read with Schedule B is for all practical purposes to suspend the operation of Chapter VII of the in Calcutta for no one will take proceedings in which no order can be made.
The effect of those sections is to confer a new jurisdiction on the 543 Chief Judge of the Calcutta Small Cause Court to entertain and try suits by landlords against tenants for recovery of possession of premises situate within the ordinary original civil jurisdiction of the Calcutta High Court when the monthly rent does not exceed Rs. 600.
Thus after Act XVII of 1950 came into force the Calcutta Small Cause Court has ceased to have any power to pass an order for possession under Chapter VII of the and the Small Cause Court of Calcutta can, under that Act,, only pass a decree for possession in a suit Which is saved by the proviso to sub section (1) of section 12 and with regard to which a special jurisdiction is conferred on that Court by section 16 of that Act.
That being the position, the word" suit " in none of the sections of Act XVII of 1950 can be said to have been used as including a proceeding under Chapter VII of the .
Therefore, the reasoning advanced in support of attributing an extended meaning to the word "suit" and then inferentially to the word decree " in section 18 (1) cannot be sustained.
It is next argued that if the word "decree" is construed strictly it will give rise to startling results in that poor tenants against whom orders for possesSion had been made under the 1948 Act will be deprived of the benefit of section 18 (1) while the wealthy tenants paying rents above Rs. 500 per month will get relief under that section and this will frustrate the intention of the Legislature.
This argument proceeds on the assumption that the Legislature intended to give relief to all tenants against whom orders or decrees for possession had been made.
The language of section 18 (1) clearly shows that the intention of the Legislature was to give relief only to certain tenants in certain circumstances.
In the first place relief is given only with respect to decree for possession made on the specified ground and not with respect to a decree for possession made on any other ground.
In the next place relief is given only when the possession of the premises in respect of which a 544 decree for possession had been made had not been made over by the tenant.
Thus tenants against whom a decree for possession had been made on grounds other than the ground specified.
in the subs section and even tenants against whom a decree for possession had been made on the specified ground but who had, voluntarily or otherwise, delivered possession of the premises get no relief under section 18 (1).
An order for possession is made by the Presidency Small Cause Court under Section 43 on a summary application under section 41 and the order directs the Bailiff of the Court to deliver possession to the applicant.
This order for the recovery of possession which under section 37 of the is final and conclusive and from which there is no appeal or a new trial under section 38 of that Act does not ordinarily take much time to be obtained or to be carried out and certainly much less than what is taken to obtain a decree for possession in a suit and to execute such decree, because both the decree for possession in a suit and the order for execution thereof are subject to appeal.
The Legislature may well have thought that cases where orders for possession had been made under Chapter VII of the with respect to premises which were situate within the small area of the ordinary original civil jurisdiction of the Calcutta High Court and which, in spite of such orders, were still in the possession of the tenants at the date of the commencement of Act XVII of 1950 would be few in number as compared to the number of cases where decrees for possession had been made with respect to premises which were situate within a very much larger area and which were still in the possession of the tenants and, therefore, did not think fit to provide for those few cases.
It must always be borne in mind, as said by Lord Halsbury in Commissioner for Special Purposes of Income Tax vs Pemsel (1), that it is not competent to any Court to proceed upon the assumption that the Legislature L. R. ; at P. 549.
545 has made a mistake.
The Court must proceed on the footing that the Legislature intended what it has said.
Even if there is some defect in the phraseology used by the Legislature the Court cannot, as pointed out in Crawford vs Spooner(1), aid the Legislature 's defective phrasing of an Act or add and amend or, by construction, make up deficiencies which are left in the Act.
Even where there is a casus omissus, it is, as said by Lord Russell of Killowen in Hansraj Gupta vs Official Liquidator of Dehra Dun Mussoorie Electric Tramway Co., Ltd. (2), for others than the Courts to remedy the defect.
In our view it is not right to give to the word " decree" a meaning other than its ordinary accepted meaning and we are bound to say, in spite of our profound respect for the opinions of the learned Judges who decided them, that the several cases relied on by the respondent were not correctly decided.
Reference was made, in, course of argument, to section 6 of the West Bengal Act LXII of 1950.
That section refers to orders or decrees made between the commencement of Act XVII of 1950 and Act LXII of 1950, i.e., between the 30th March, 1950, and the 30th November, 1950, and cannot have any application to the order for possession made in this case on the 27th February, 1950.
For reasons stated above this appeal must be allowed and the order made by the High Court should be set aside and the respondents ' application under section 18 (1) of Act XVII of 1950 should be dismissed and we order accordingly.
In the circumstances of this case we make no order as to costs except that the parties should bear their own costs throughout.
Appeal allowed.
Agent for the respondent : Sukumar Ghose.
(1) 6 Moo.
P.C. I; 4 M.I.A. 179.
(2) (1933) L.R. 60 I.A. I3; A.I.R. 1933 P.C 63.
| The expression " decree for recovery of possession " in section 18 (1), of the West Bengal Premises Rent Control (Temporary Provisions) Act (Act XVII of 1950) does not include an order for recovery of possession made under section 43 'of the , and a person against whom an order for 534 recovery of possession has been passed under section 43 of the , is not therefore entitled to claim relief under the provisions of section 18 (1) of Act XVII of 1950.
Rai Bahadur Atulya Dhan Banerjee vs Sudhangsu Bhusan Dutta ([1951] 5 , Dhanesh Prokash Pal vs
Lalit Mohan Ghosh ([1951] , Mohan Lal Khettry vs Chuni Lal Khettry ([1951] Jethmull Sethia vs Aloke Ganguly ([19511 , Iswari Prosad Goenka vs N. B. Sen ([19511 overruled.
In construing a statute it is not competent to any court to proceed upon the assumption that the Legislature has made a mistake and even if there is some defect in the phraseology used by the Legislature, the Court cannot aid the defective phrasing of an Act or add and amend, or by construction, make up deficiencies which are left in the Act.
Commissioner for Special Purposes of Income Tax vs Pemsel (11891] A.C. 531); Crawford vs Spooner ([1846 51] 4 M.I.A. 179) and Hansraj Gupta vs Official Liquidator of Dehra Dun Mussourie Electric Tramway Co. Ltd. ([1933] 60 I.A. 13) referred to.
|
Appeal No. 153 of 1951.
Appeal from the Judgment and Decree dated 2nd January, 1946, of the Chief Court of Auadh in First Civil Appeal No. 9 of 1940 arising out of the Decree dated 6th November, 1939, of the Court of Civil Judge in Regular Suit No. 36 of 1937.
Bakshi Tek Chand (Onkar Nath Srivstava, with him) for the appellants.
Achhru Ram (Bishan Singh, with him) for the respondents.
January 23.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal from the judgment and decree passed by the late Chief Court of Oudh, affirming the judgment and decree passed by the Civil Judge of Sitapur, dismissing the plaintiffs ' suit.
One, Thakur Shankar Bux Singh, proprietor of the Estate known as Rampur Kelali, situated in District Sitapur (Oudh) was heavily indebted and the estate had been in the possession of Deputy Commissioner of Sitapur as receiver from 1892 up to 11th July, 1901.
Thereafter he was declared a disqualified proprietor under the provisions of Section 8 (D) (1) of the U.P. Court of Wards Act (U.P. Act III of 1899) and the Court of Wards took possession of the estate on the 1st August, 1901.
Under Section 34 of the Act he was 916 not competent to dispose his property by will without the consent in writing of the Court of Wards, though prior to the 1st August, 1901, he had made four successive wills, the last being dated 19th June, 1901, under which he gave his estate absolutely to his wife.
On the 30th November, 1901, he made a will giving a life interest to his wife and the remainder over to his cousin Ganga Bux Singh after providing for certain legacies by way of maintenance in favour of his three daughters, his father 's sister and his mother.
The Court of Wards withheld its consent to this will which thus fell through.
On the 7th January, 1904, Ganga Bux Singh executed in his favour a registered deed of agreement agreeing to pay him Rs. 50 per month during his lifetime with effect from the month in which he would execute a will in favour of Ganga Bux Singh and his sons and submit the same for sanction of the Members of the Board of Revenue.
A draft of the will was accordingly prepared by him on the 18th January, 1904, under which he gave a life interest to his wife and the residue of the property to Ganga Bux Singh and after him to his sons after providing legacies for maintenance in favour of his daughters, father 's sister and mother.
The Board of Revenue intimated on the 25th May, 1904, that it would not withhold its consent to a will similar to that contained in the draft but altered in the light of the proposals contained in the further letter dated 27th April, 1904.
He thereupon duly made and published a will on the 28th July, 1904, in accordance with the suggestions contained in the Board 's letter dated 25th May, 1904, cancelling all the previous wills executed by him.
It appears that he handed over the original of this will to Ganga Bux Singh but did not give any intimation of the execution thereof to the authorities and the authorities could only come to know of the same when Ganga Bux Singh gave the original will to the Special Manager on or about the 19th December, 1905.
He appears to have changed his mind thereafter and having embraced Christianity intended to marry a Christian woman and submitted to the Court of Wards on the 8th June, 1906, the draft of a new will which he 917 intended to execute in favour of his Christian wife.
The Board withheld its consent to that new will and intimated on the 13th July, 1906, its refusal and also communicated thereby the withholding of its consent to the will already executed by him on the 28th July, 1904.
A further attempt by him on the 21st November, 1906, to obtain the consent of the Court of Wards to another draft will was also unsuccessful and the will dated the 28th July, 1904, was the only last will and testament executed by him and got registered after consent obtained from the Court of Wards.
Shankar Bux Singh died thereafter on the 28th July, 1922, and he being a Christian at the time of his death successsion to his property was governed by the Indian Succession Act.
His wife got 1/3rd of the estate and the remaining 2/3rds were divided in equal shares between his surviving daughter and the son of a predeceased daughter of his.
Mutation was effected in the records of rights and the name of the widow was .shown there as the owner of the estate in his place and stead.
The Court of Wards relinquished charge of the estate sometime in November, 1925.
The widow executed on the 16th August, 1927, a deed of gift conveying the bulk of the estate to her daughter and the son of the predeceased daughter.
She also executed another deed of gift in the same year conveying the rest of the properties and on the 8th September, 1928, Ganga Bux Singh filed a suit in the Court of the Subordinate Judge of Sitapur for a declaration that under the aforesaid will she had only a life interest in the property and the transfers made by her were void.
This suit was contested by her and one of the defences taken was that Ganga Bux Singh could not maintain the suit without first obtaining letters of administration with the will annexed.
This defence was upheld and the suit was dismissed on the 14th July, 1930.
Ganga Bux Singh having died in the meanwhile on the 19th October, 1929, his sons applied for letters of administration with the will annexed on the 25th September, 1930, on the original side of the Chief Court of Oudh.
This application was opposed by the 918 widow and other heirs of Shankar Bux Singh inter alia on the ground that the will had been executed without the sanction of the Court of Wards.
Mr. Justice Kisch delivered an elaborate judgment, negatived all the objections and granted letters of administration with the will annexed to the sons of Ganga Bux Singh on the 16th November, 1931.
An appeal filed by the widow and heirs of Shankar Bux Singh against that decision was allowed by the Bench of the Chief Court of Oudh at Lucknow on the 8th September, 1933, and the orders passed by the lower court granting letters of administration with the will annexed were set aside.
The sons of Ganga Bux Singh took an appeal to the Privy Council and their Lordships of the Privy Council on the 7th May, 1937, reversed the decree of the Appeal Court and restored the decree passed by Mr. Justice Kisch.
Their Lordships however observed that the only effect of their decision was that letters of administration with a copy of the will annexed must be granted as prayed but that would not in any way prejudice any proceedings against any of the beneficiaries which may be open to the respondents or any of them.
On the 9th September, 1937, the widow, the daughter and the son of the predeceased daughter of Shankar Bux Singh, the plaintiffs, 'filed the suit out of which this appeal arises, against the three sons of Ganga Bux Singh, the defendants, for a declaration that the will dated the 28th July, 1904, was inoperative and ineffectual and that in any case the defendants had no right, title or interest in the properties in suit, that plaintiff I was entitled to hold the property in suit under the will of Shankar Bux Singh dated 19th June, 1901, or that the plaintiffs 1 to 3 were entitled to the same as heirs at law of Shankar Bux Singh deceased under the provisions of the Indian Succession Act, and for further and other reliefs.
In the plaint they alleged that the will was inoperative as Shankar Bux Singh had no animus testandi and that it was void and inoperative in respect of the testamentary disposition in favour of Ganga 919 Bux Singh and his sons because Ganga Bux Singh failed to perform his part of the contract as regards the payment of monthly allowance and the defendants therefore could not take advantage of or claim any benefit tinder that testamentary disposition and further the payment of the said allowance being a condition precedent and the condition not having been fulfilled the disposition became inoperative.
The defendant 3 filed a written statement on the 7th February, 1938, contesting the plaintiff 's claim.
He contended that the plea as to the validity or effect of the will was barred by resjudicata by virtue of the judgment of the Privy Council dated 7th May, 1937.
He denied that the will was executed in consideration of the agreement.
He also denied that there was any contingent or conditional contract or any trace of the alleged condition in the whole of the correspondence between Shankar Bux Singh and the Board of Revenue.
The learned Civil Judge, Sitapur, after considering the evidence, oral as well as documentary, led before him held that the will as well as the agreement formed one contract, that Ganga Bux Singh had failed to perform his promise or his part of the contract, that the only point which was agitated before their Lordships of the Privy Council was as regards the consent of the Court of Wards and that therefore even though the plaintiffs were precluded from disputing the genuineness of the will they were not precluded from seeking a declaration to the effect that the defendants were not entitled to any benefit under the will, and that the decision therefore did not operate as res judicata so far as issues in the present case were concerned.
He however held that the contract clearly provided a remedy for breach on the part of either party, that Shankar Bux Singh did not in fact cancel the will and could not be said to have treated it as inoperative, that Ganga Bux Singh acquired a vested interest in the estate on the death of the testator and that on his death that interest devolved on his sons amongst whom were the defendants in the suit and that the plaintiffs were, not entitled to any relief as claimed, The 920 plaintiffs filed an appeal to the Chief Court of Oudh.
The Chief Court of Oudh negatived the contention that Shankar Bux Singh had no animus testandi and that it was a will in form only and not in substance, holding that it was barred by res judicata by reason of the decision of their Lordships of the Privy Council.
It also negatived the contention that the bequest in favour of Ganga Bux Singh was a conditional bequest or that Ganga Bux Singh having failed to fulfil his obligation to pay the gujara his original character as a legatee changed into that of a trustee and he must hold the beneficial interest for the testator or his heirs.
The appeal was therefore dismissed with costs.
The plaintiffs applied for leave to appeal to the Privy Council and the necessary certificate was granted by the Chief Court of Oudh on the 8th August, 1947.
It is necessary at the outset to set out the deed of agreement and the will executed by Ganga Bux Singh and Shankar Bux Singh respectively on dates the 7th January, 1904, and the 28th July, 1904.
The deed of agreement dated the 7th January, 1904, ran as under: "Whereas, my cousin Thakur Shankar Bakhsh Singh, Taluqdar of Rampur Kalan, has proposed to make a bequest of his taluka, immovables, movables, rights etc.
in favour of his wife and, after her death in my favour and that of my sons Dwarka Nath Singh, Ajodhya Nath Singh and Tirbhuwan Nath Singh, there fore by way of consideration for this concession and favour, I, the executant, out of my own free will do hereby execute this agreement in favour of my cousin aforesaid that in the month in which the said cousin might execute the said will in my favour and that of my sons and lays the same along with an application before the Deputy Commissioner, Sitapur district, for sanction of the Members of the Board of Revenue, I shall from the 1st date of the month following that month, continue to pay to my said cousin Rs. 50 in cash every month during his life, so long as the said will remains in force and under this contract I make my person liable and hypothecate the same by virtue 921 of this agreement.
If I, the executant, fail to perform the said contract the said cousin has power to have the same performed by me, the executant, through Court.
If the will mentioned above executed by the said cousin, be not sanctioned by the Members of the Board of Revenue or if under any circumstance, the kV said cousin may himself revoke the said will, then from the time of revocation or refusal by the Board of Revenue the said cousin shall not be entitled to receive the aforesaid monthly amount of Rs. 50 and whatever money the said cousin might have received from me, the executant, up to the said refusal or revocation the said cousin shall necessarily be bound to refund that money to me, the executant.
" The will dated the 28th July, 1904, was executed by Shankar Bux Singh in the terms following: " I am Thakur Shankar Baksh alias section John son of Thakur Anant Singh, Taluqdar of Rampur and Grantee of Piprawan, district Sitapur.
Out of my own free will, inclination and accord and consent I make a will that after my death my wife for her lifetime shall remain in possession of my entire Ilaqa (estate) as well as the movable and immovable property, left by me, together with the rights etc., relating to the said properties, without the power of any sort to transfer the said properties and rights, that on the death of the said wife all the aforesaid property and the rights shall devolve on my real cousin, Ganga Bakhsh with all the proprietary powers, and that on the death of Ganga Bakhsh the said entire property and the rights shall devolve on Dwaraka Nath, Ajodhia Nath and Tirbhuwan Nath, sons of Ganga Bakhsh, like Ganga Bakhsh himself, in the following shares: Dwaraka Nath annas 6, Ajodhia Nath aninas 5, Tirbhuwan Nath annas 5: and that the persons mentioned below shall continue to get the maintenance allowance (Guzara) according to the amounts and conditions noted below: Musammat Permeshuri, my eldest daughter, married at Allahabad to the son of Rai Anant Ram, generation 922 after generation, (limited) to male issue, Rs. 100 per month; Musammat Chandrani, my younger sister, married to Rai Raghubir Bakhsh, son of Rai Kunwar Bahadur, Rais of Shahabad, district Hardoi, generation after generation (limited) to male issue, Rs. 60 per month; Mussamat Roop Rani, my real paternal aunt (father 's sister), wife of Munshi Chedi Prasad deceased, Rais of Qasba Mahona, district Lucknow, generation after generation, (limited) to male issue, Rs. 45 per month; Musammat Sohni, my mother for her life, Rs. 70 per month.
* * * * * Be it also known that my estate (Ilaqa) is under the Superintendence of the Court of Wards and the Hon 'ble Members of the Board of Revenue have granted me power to execute the will so I do hereby execute this my last will cancelling all the previous wills executed by me ' " It is clear from the terms of the deed of agreement that Ganga Bux Singh agreed to pay Rs. 50 in cash every month during the lifetime of Shankar Bux Singh in consideration of Shankar Bux Singh having proposed to make a bequest of the remainder in favour of Ganga Bux Singh and his sons and that it was after the deed of agreement was got registered by Ganga Bux Singh on the 11 th January, 1904, that the draft of the will was submitted on the 18th January by Shankar Bux Singh to the Court of Wards.
It was this draft of the will amended as it was by the letter dated 27th April, 1904, that was engrossed in the will which was ultimately executed on the 28th July, 1904, after the letter of sanction obtained from the Board on 25th May, 1904.
The learned Civil Judge under the circumstances came rightly to the conclusion that the deed of agreement and the will formed part of the same transaction, that the consideration for the will was the deed of agreement and the consideration for the agreement was the will and that the will 923 as well as the agreement formed one contract.
This finding was not challenged before the Chief Court of Oudh and could not be challenged before us.
There was also a further finding of fact which was recorded by the learned Civil Judge and it was that Ganga Bux Singh failed and neglected to make any payment to Shankar Bux Singh in terms of the deed of agreement even though Shankar Bux Singh executed the will and laid the same along with the application before the Deputy Commissioner, Sitapur, for sanction of the Members of the Board of Revenue and that Ganga Bux Singh thus failed to perform his part of the contract.
This finding also was not challenged before the Chief Court of Oudh and could not be challenged before us.
The question therefore which falls to be considered by us is what is the effect of the failure on the part of Ganga Bux Singh to make the payments to Shankar Bux Singh in terms of the deed of agreement.
It was urged by Dr. Tekchand, who appeared for the plaintiffs before us that by reason of such non payment and the breach of contract on the part of Ganga Bux Singh the will became ineffective and inoperative, that the payment of Rs. 50 per month during the lifetime of Shankar Bux Singh was a condition precedent to the vesting of the legacy in favour of Ganga Bux Singh and that condition not having been fulfilled the legacy did not vest in Ganga Bux Singh and that on a true construction of the terms of the will Ganga Bux Singh acquired no vested interest in the remainder.
He also urged that the scope of the Privy Council judgment was misunderstood by the Chief Court of Oudh and that both the questions as regards animus testandi and the payment of Rs. 50 per month being a condition precedent though they were barred by res judicata in regard to the due execution of the will were still open to him as affecting the right of Ganga Bux Singh to the legacy which was provided for him by Shankar Bux Singh under the will.
In regard to the last contention urged by Dr. Tekchand both the courts below were of the opinion that the question of animus testandi was barred by res 924 judicata.
It was held by their Lordships of the Privy Council that the will in dispute was not revoked and that it was the last will and testament of Shankar Bux Singh.
That decision necessarily meant that the testator when he appended his signature to the will was in a sound and disposing state of mind, was a free agent and 'duly executed the will in accordance with the law.
The decision was conclusive as regards the testamentary capacity, due execution and the representative title of the person to whom the letters of administration with the will annexed were granted.
It was not open therefore to the plaintiffs to contend that the will which was executed by Shankar Bux Singh was a will merely in form and not in substance.
The question of animus testandi was therefore barred by res judicata.
In regard however to the question whether the bequest in favour of Ganga Bux Singh could take effect by reason of default in payment the decision of the Privy Council did not constitute res judicata and it was open to the plaintiffs to urge that contention.
Both the courts ' below therefore allowed the plaintiffs to agitate that ques tion though they came to a conclusion adverse to the plaintiffs.
We are of the opinion that there was no bar of res judicata and the courts below were right in allowing the plaintiffs to agitate that question.
The payment of Rs. 50 per month to Shankar Bux Singh during his lifetime might be a condition precedent to the whole will coming into operation or might, be a condition precedent to the vesting of the legacy in favour of Ganga Bux Singh.
If the plaintiffs urged the former position that plea would certainly be barred by res judicata.
No court would grant a probate or letters of administration with the will annexed in regard to a will which has ceased to be operative and was a mere scrap of paper.
The plaintiffs could not therefore be heard to say that 'by reason of the non fulfilment of the condition precedent the whole will had become inoperative, for that would run counter to the decision of the Privy Council.
Even on merits such a position would be untenable for the simple reason that besides 925 Ganga Bux Singh there was the widow, who was given a life interest and there were the three daughters, the father 's sister and the mother who were given legacies by way of maintenance and they were certainly not guilty of non fulfilment of any condition precedent.
The will would certainly therefore stand so far as they were concerned and the whole effect of the non fulfilment of the condition precedent qua Ganga Bux Singh would be to prevent the vesting of the legacy in his favour.
The latter position therefore would be available to the plaintiffs and they could contend that by reason of the non fulfilment of the condition precedent by Ganga Bux Singh the legacy provided in his favour did not vest in him.
If the payment of Rs. 50 per month therefore constituted a condition precedent the plaintiffs were on firm ground and that position could not and was not contested before us by the learned counsel appearing for the defendants.
It therefore remains to be considered whether the payment of Rs. 50 pet month to Shankar Bux Singh during his lifetime constituted a condition precedent to the vesting of the legacy in favour of Ganga Bux Singh.
There is no doubt, as held by the learned Civil Judge, that the consideration for the will was the deed of agreement and the consideration for the agreement was the will and that the will as well as the agreement formed one contract.
But for Ganga Bux Singh having executed the deed of agreement Shankar Bux Singh would not have forwarded the draft will to the Court of Wards for its sanction and he would also not have executed the will on the 28th July, 1904.
The contract was an overall contract under which both the parties had to perform their respective obligations.
The obligation on the part of Ganga Bux Sigh was to execute the deed of agreement, agreeing to pay the moneys to Shankar Bux Singh in accordance with the terms thereof.
The obligation on the part of Shankar Bux Singh was to execute the will and submit it to the Court of Wards for its sanction.
Both these obligations were fulfilled by the parties and the two documents were supported by consideration and became binding 926 on both the parties.
The nonperformance of the agreement to pay by Ganga Bux Singh constituted at best a failure.
to fulfil his obligation and Shankar Bux Singh became entitled to pursue his rights and remedies against Ganga Bux Singh by reason of the breach of contract by him.
It was urged by Dr. Tekchand that the consideration here constituted a condition precedent and that the non payment of Rs. 50 per month by Ganga Bux Singh constituted non fulfilment of condition precedent.
He relied upon the observations of Chief Justice Wills in Acherley vs Vernon, 125 English Reports 1106 at page 1108 (Willes 153 at page 156): " I know of no words that either in a will or deed necessarily make a condition precedent, but the same words will either make a condition precedent or subsequent according to the nature of the thing and the intent of the parties.
If therefore a man devise one thing in lieu and consideration of another, or agree to do anything or pay a sum of money in consideration of anything to be done, in these cases that which is the consideration is looked upon as a condition precedent.
So is the case of Peters vs Opie, I Ventr.
177, and I Saund.
If a man agree to pay a sum of money to another pro labore suo in pulling down a house, the pulling down of the house is a condition precedent.
So is the case of Thorpe and Thorpe.
I Salk.
171, where a man agreed to pay a sum of money to another he releasing the equity of redemption in certain lands.
And so is the case of Turner vs Goodwin, adjudged by Lord Macclesfield and the rest of the Judges of B. R. upon great consideration, P. 13 Anne, in which case Goodwin was to pay Turner 15001.
be assigning a judgment.
In all which cases it was holden that the party who was to receive the money was not entitled to demand it until he had performed that which was the consideration of the payment, and which was considered in all these cases to be in the nature of a condition prece dent.
* * * * 927 So likewise if it plainly appear to be the intent of the testator that the devise shall not have the benefit of the devise unless he perform a certain act enjoined him by the devisor, this is a condition precedent; and the devisee shall have no benefit of the devise until he perform it, even though the condition be never so unreasonable if it be not illegal or impossible; for cujus est dare ejus est disponere.
" These observations were particularly relied upon by Dr. Tekehand in support of his contention that the payment of Rs. 50 per month to Shankar Bux Singh during his lifetime constituted a condition precedent to the vesting of the legacy in favour of Ganga Bux Singh.
While recognising the force of these observations we are constrained to observe that the terms of the deed of agreement negative any such contention.
The agreement itself provided what was to happen if payment was not made in accordance with the terms thereof.
If Ganga Bux Singh failed to perform the contract Shankar Bux Singh was to have the power to have the same performed by Ganga Bux Singh through Court.
This consequence could not be contemplated if the payment constituted a condition precedent and the non fulfilment of the condition precedent was to have the effect of rendering the agreement inoperative.
In that event the agreement itself would become inoperative and no rights under the agreement would survive to Shankar Bux Singh.
The right which was therefore given to Shankar Bux Singh to have the agreement performed by Ganga Bux Singh contemplated the existence and the continued existence of the agreement so as to enable Shankar Bux Singh to hold Ganga Bux Singh to its performance, The continued existence of the contract was in contemplation of the parties and so far as Ganga Bux Singh is concerned it was at no stage contemplated that he could forego the performance of the obligation on his part to pay Rs. 50 per month to Shankar Bux Singh during his lifetime so long as the will stood unrevoked.
928 It is significant to observe on the other hand that two events were contemplated so far as Shankar Bux Singh himself was concerned.
The one was the withholding of the consent of the Court of Wards and the other was the revocation of the will by Shankar Bux Singh himself.
The sum of Rs. 50 per month was agreed to be paid by Ganga Bux Singh to him from the month when Shankar Bux Singh executed the will and laid it before the Court of Wards for its sanction.
The Court of Wards might withhold its consent to the will and in that event whatever payments were made during the interval by Ganga Bux Singh to Shankar Bux Singh had to be refunded by the latter.
Even though the Court of Wards might sanction the will Shankar Bux Singh might later on revoke the will and the consequence of such revocation was also provided in that Shankar Bux Singh was to refund to Ganga Bux Singh the amounts which he had paid up to the time of revocation to Shankar Bux Singh in accordance with the terms of the agreement.
It has to be observed moreover that all these constituted independent obligations on the part of both the parties.
The obligation on the part of Ganga Bux Singh was so long as the will stood unrevoked to pay to Shankar Bux Singh Rs. 50 per month during his lifetime and the obligation on the part of Shankar Bux Singh was to obtain the consent of the Court of Wards and to leave the will unrevoked during his lifetime.
These obligations were independent of each other and the consequences of the non performance of these obligations on the part of each of the parties were expressly provided in the agreement itself.
It could not therefore be contended that the payment of Rs. 50 per month to Shankar Bux Singh during his lifetime constituted a condition precedent to the vesting of the legacy in his favour.
That was merely a consideration provided by Ganga Bux Singh for the execution of the will by Shankar Bux Singh in his favour and if Ganga Bux Singh committed a breach of the agreement the only result was that Shankar Bux Singh would become entitled to recover the amount due on such default 929 from Ganga Bux Singh by having recourse to a court of law.
The contract would continue to subsist, the parties being relegated to their rights and remedies thereunder as contemplated by the parties.
In spite of the non payment by Ganga Bux Singh of the sum of Rs. 50 per month to Shankar Bux Singh in accordance with the terms of the agreement at no time did Shankar Bux Singh revoke the will nor did he pursue Ganga Bux Singh in a court of law for the recovery of the amounts in respect of which Ganga Bux Singh was in default.
He left the will unrevoked and on his death the will became effective as his last will and testament and operated to vest in Ganga Bux Singh ail interest in the remainder as therein provided.
There is nothing in the will itself which in terms makes the bequest conditional on regular payment of the amount under the agreement.
The argument which was advanced by Dr. Tekchand based on section 81 of the Indian Trusts Act could not avail him for the simple reason that the intention of Shankar Bux Singh had to be gathered as on the date of the execution of the will and not at any subsequent time thereafter.
That intention was clearly to effect a testamentary disposition of the remainder in favour of Ganga Bux Singh.
It was certainly farthest from the thought of Shankar Bux Singh not to dispose of the beneficial interest in the remainder in favour of Ganga Bux Singh with the result that there could neither be a secret trust nor a trust of imperfect obligation created in favour of the heirs at law of the testator Shankar Bux Singh.
The argument of Dr. Tekchand that the remainder did not vest in Ganga Bux Singh but fell into residue by reason of his having predeceased the widow of Shankar Bux Singh is equally of no avail.
The legacy in favour of Ganga Bux Singh was a legacy of the remainder of the estate which vested in Ganga Bux Singh but was deferred in possession till after the extinction of the life interest created in favour of the plaintiff 1.
Such vested interest could devolve upon the defendants, the heirs and legal representatives of 120 930 Ganga Bux Singh on the death of the latter and the defendants were therefore as the heirs and legal repre sentatives of Ganga Bux Singh since deceased rightly entitled to the same.
As the bequest was not conditional and did not lapse there could be no question of any resulting trust or of any intestacy with respect to the remainder.
The result therefore is that the appeal fails and must be dismissed with costs.
Appeal dismissed.
Agent for the appellants : Rajinder Narain.
| On the 7th January, 1904, G, a cousin of S, executed an agreement in favour of S, the material portion of which ran as follow&: "Whereas my cousin S has proposed to make a request of his taluka in favour of his wife and after her death in my favour and 118 914 that of my sons therefore by way of consideration for this concession and favour, I, the executant, out of my own free will do hereby execute this agreement in favour of my cousin aforesaid that in the month in which the said cousin may execute the said will in my favour and that of my sons and lays the same along with an application before the Deputy Commissioner, Sitapur district, for sanction of the Members of the Board of Revenue, I shall from the 1st date of the month following that month continue to pay the said cousin the sum of Rs. 50 in cash every month during his life so long as the said will remains in force If I fail to perform the said contract the said cousin has power to have the same performed by me through the Court.
" This agreement was registered on the 11th January.
On the 18th January, S submitted a draft will for sanction and the will as amended and sanctioned was executed on the 28th July, 1904.
This will provided as follows: "after my death my wife for her lifetime shall remain in possession of my entire estate without the power of any sort to transfer the said properties and rights, that on the death of the said wife all the aforesaid property and rights shall devolve on my cousin G with all proprietary powers and that on the death of G, the said entire property and rights shall devolve on X, Y, Z, sons of G, in the following shares . " The will also provided for maintenance for the daughter, sister, aunt and mother of section On the application of G 's sons (G having died) letters of administration with the will annexed were granted to them by the Chief Court of Oudh and this decision was affirmed by the Privy Council on appeal in 1937.
The heirs of S thereupon instituted a suit against the sons of G for a declaration that the will was inoperative and ineffectual and that G 's sons had in any case no right to the properties of S, as S had no animus testandi and G had also failed to pay Rs. 50 to S as agreed: Held, (i) that the deed of agreement and the will formed parts of one transaction and formed one contract, consideration for the will being the agreement, and consideration for the agreement being the will; (ii) as the Privy Council had decided that the will was the last will and testament of S and granted letters of administration, the question of animus testandi was res judicata ; (iii) with regard to the plea that the monthly payment of Rs. 50 was a condition precedent to the validity of the will and that by reason of the non fulfilment of this condition the will had become inoperative, such a plea was also barred by res judicata as the Privy Council bad granted letters of administration; and even on the merits the plea was untenable as the wife and other relations of the testator had also certain rights under the will which did not depend on the monthly payment by G; (iv) the question whether the payment of Rs. 50 was a con dition precedent to the vesting of the legacy in G or G 'B sons was 915 not, however, res judicata and it was open to the plaintiff to raise such a plea; (v) on a proper interpretation of the terms of the agreement, the payment of Rs. 50 per month was not a condition precedent to the vesting of the legacy in G, but merely a consideration, and the plaintiffs ' remedy was to enforce the agreement if it was not duly performed; (vi) that as G obtained a vested remainder under the will, his interest did not fall into the residue on his death before the widow, but vested in his sons; and as the bequest to G did not lapse there was no question of any resulting trust or of any intestacy with respect to the remainder, and G 's sons were entitled to the estate under the will.
|
Appeal No. 93 of 1952.
Appeal from the Judgment and Decree dated the 20th January, 1950, of the High Court of Judicature at .Calcutta (Das and Gupta JJ.) in Appeal from Original Decree No. 141 of 1940 arising out of Judgment and Decree dated the 8th May, 1940, of the Court of the Subordinate Judge, 1st Court of Zillah If owrah in Title Suit No. 38 of 1948.
N.C. Chatterjee (A. N. Sinha, with him) for the appellant.
Panchanan Ghosh (Syama Charan Mitter and A.K. Dutt, with him) for the respondent.
January 28.
The Judgment of the Court was delivered by DAS J.
This is an appeal by the plaintiff ' in an ejectment suit.
His case was that defendant No. I Pratul Chandra Ghose was a Ticca tenant of premises Nos. 2 and 3, Watkin 's Lane, Howrah, comprising an area of I Bigha 19 Cottahs of land on a rent of Rs. 78 per annum under the landlords Kumar Sarat Kumar Roy and Bibhuti Bhusan Chatterjee, proform a defendants Nos. 2 and 3, that the plaintiff took a Mourashi Mokarari lease from these landlords on the 23rd September, 1937, and thereby became the immediate landlord of the said defendant and that the teancy was determined by a notice to quit dated the 7th October, 1937.
The trial Court, amongst other 932 things, found as a fact that the tenancy of the defendant Pratul Chandra Ghose was permanent, heritable and transferable and was not liable to be determined by notice.
The plaintiff preferred an appeal to the High Court but the High Court dismissed that appeal holding, amongst other things, that the finding of the trial Court as to the nature of the tenancy was correct.
The plaintiff has now come up on appeal before us after getting a certificate from the High Court that it is a fit case for appeal to this Court.
Relying on the decision of the Privy Council in Dhanna Mal vs Moti Sagar(1) Shri N. C. Chatterjee appearing on behalf of the plaintiff appellant contends that the present appeal is not concluded by the concurrent finding of the Courts below that the tenancy was permanent because that question was one of the proper inference in law to be deduced from the facts as found by the Courts below.
The learned counsel has, therefore, taken us through.
the evidence mostly documentary, as to the nature of the tenancy.
The earliest document referred to is Exhibit P/11, being a conveyance executed in 1226 B.S.1819 1820 by Sheikh Manik and another in favour of Mrs. Cynthia Mills Junior.
How the vendors had acquired their title is not known.
By that deed of sale the vendors, for a money consideration,, conveyed their interest in the lands described as Jamai lands to the purchaser who, on payment of rent of Rs. 480 per kist, was to "go on possessing and enjoying the same with great felicity down to your sons and grandsons etc.
, in succession by constructing houses and structures." Mrs. Cynthia Mills died some time before October, 1855, and her son John Henry Mills who had succeeded her sold the premises to one Mrs. Sabina Love by a conveyance Exhibit P/10 dated the 29th October, 1855.
It appears from that deed that by that time a tank with masonry steps had been excavated on the lands which were described as a plot of rentpaying garden land.
The consideration for the sale (1) (1927) L. R. 54 1.
A. 178.
933 was Rs. 1,000.
The following provisions of the sale deed are of importance: "From this date being entitled to make gift and sale of the said property, you do bring into your own possession the said lands etc., and on paying annually to the Maliks Zemindars Rs. 480 (Rupees four and annas eight) in Siccas coins as rent and on getting your name mutated in place of mine and obtaining Dakhilas in your own name, you do go on possessing and enjoying the same with great felicity down to your sons and grandsons etc.
, in succession.
" By a conveyance Exhibit P/9, dated the 10th October, 1856, Mrs. Sabina Love transferred the premises to one Francis Horatio Dobson.
The premises were there described as "garden land held under Mourashi Patta" which Patta has since been held to be a spurious document in a subsequent litigation.
It appears from this document that Mrs. Cynthia Mills had excavated a tank and constructed a pucca ghat and laid out a garden and that on her death her son and heir John Henry Mills came into possession of the land and that he had sold the premises to Mrs. Sabina Love and that after her purchase Mrs. Sabina Love had enclosed the said lands and had manufactured bricks with the earth of the land she purchased.
The consideration for this conveyance was Rs. 1,200.
It provided as follows : " From to day you become the owner of the said lands with powers of making gift and sale.
On keeping the said lands together with the tank with all interests therein in your possession and under your control, and on paying according to the previous Patta the Mokarari annual rent of Rs. 480 in Sicca coins into the Sherista of the Zemindar and on having the previous name struck off from the landlord 's Sherista and getting your own name recorded therein, you do go on enjoying and possessing the same with great felicity down to your sons, grandsons etc.
, in succession .
" On 10th Jeshta 1266 B.S. corresponding to 23rd May, 1859, a notice under sections 9 and 10 of Regulation V of 1812 was issued by the then Zemindars Rani 934 Lalanmoni and Raja Purna Chandra Roy.
It was ,addressed to " Mrs. Cynthia Mills Junior, Sarbarahkar Mr. Dobson, of Salkhia.
" It rail as follows: " This is to inform you that you are in.
possession of I Bigha 19 Cottas of lands of different kinds as per the boundaries given below as recorded in the Mal Department in the said village for which according to your own statement you are paying a yearly rental of Rs. 4126.
But you have taken no settlement in respect thereof from our estate (sarkar).
Now on fixing the annual Jama of the said lands according to the prevailing rate as per Jamabandi at Rs. 137 8 0 a year, fifteen days ' notice is given to you under the provisions of sections 9 and 10 of Regulation V of 1812 and you are hereby informed that within the said period you should appear before, our Zamindary Cutchery and accept a Pottah after submitting a Kabuliyat according to the practice in respect of the land and Jama.
In default, after the expiry of the said period action will be taken according to law, and thereafter no plea shall be entertained.
" The requisition not having been complied with, the landlords evidently filed a suit being Suit No. 590 of 1859.
The pleadings in this suit are not on the record.
On 21st September, 1860, the Principal Sudder Amin delivered his judgment, Exhibit 24.
It appears from that judgment that the following two issues had been framed: " 1.
Whether the plaintiffs have served notice on the other party for assessment of Jama ? 2.
Whether a Jama can be assessed in respect of the disputed lands; if so at what rate?" The Principal Sudder Amin overruling the objection of the defendants held that the landlords had full power to assess the rent and accordingly he fixed the rent at Rs. 2 per Cotta which worked out at Rs. 78 in respect of the entire land.
There was an appeal from that decision which, however, was dismissed by the judgment Exhibit Z (2) delivered on the 18th March, 1862 .
The Mourashi Patta relied upon was rejected as 935 it was not registered and appeared, on examination, to have been newly written and filed.
Thereafter the landlord filed a suit for rent of the disputed lands# against Dobson and Exhibits Z and Z (1) are the certified copies of the judgment and order passed thereon.
On the 29th May, 1866, Dobson executed two mortgages (Exhibits P/6 and P/7) in favour of De Rozario and John Dominic Freitas for Rs. 4,000 and Rs, 2,000 respectively.
The two re conveyances dated 29th February, 1874, and 12th March, 1874, are also on the record.
On 6th March, 1874, Dobson sold the premises to Henry Charles Mann by a deed which is Exhibit P/5.
The consideration for the sale was Rs. 9,500.
It appears from this deed that by that time there were two brick built dwelling houses on the property which came to be numbered as Nos. 2 and 3, Watkin 's Lane.
On 11th September, 1883, Henry Charles Mann sold the premises to George Jones for Rs. 10,000: vide Exhibit P/4.
In both those sale deeds the transferee is granted a heritable right forever.
In the assessment books of the Howrah Municipality (Exhibits 22 series) the interest of George Jones is described as Mourashi.
In the landlord 's Sherista the nature of the tenancy is not stated and Dobson continues to be the recorded tenant (Exhibit D series).
There was, however, no column.
in the rent receipts to indicate the status of the tenant.
It appears that on the death of George Jones the estate came into the hands of the Administrator General of Bengal representing the estate of George Jones.
In the rent receipts of Dighapatia Raj the rent is said to be "received from Jones Administrator General of Bengal." In May, 1931, the plaintiff and the Administrator General of Bengal entered into an agreement for sale of premises No. 2, Watkin 's Lane, being a portion of the premises in question, for a sum of Rs. 10,001 and Rs. 1,001 was paid by the plaintiff as and by way of earnest money.
The landlords having declined to subdivide the ground rent between the two portions of the premises, namely, Nos. 2 and 3, Watkin 's Lane, and a portion of the Premises No. 2, Watkin 's Lane, having fallen down the 936 agreement for sale appears to have fallen through.
On the 4th June, 1932, the plaintiff suggested that a lease for 20 years should be granted which was refused by the Administrator General, Bengal.
Then there was some negotiation between the plaintiff and the Administrator General of Bengal for the sale of both the premises, Nos. 2 and 3, Watkin 's Lane, to the plaintiff for a sum of Rs. 12,500.
The plaintiff on 9th April, 1933, sent a draft deed of sale (Exhibit 15) for the approval of the Administrator General of Bengal describing the premises as a Mokarari Mourashi homestead.
On 21st April, 1933, Dighapatia Raj Estate wrote to the Administrator General.
of Bengal saying that the tenancy was a Ticca one.
On 6th June, 1933, the Administrator General of Bengal declined to approve the draft as drawn.
After some further proposal by the plaintiff for a long lease he declined to purchase the property on the ground that the Administrator General of Bengal had not a good marketable title.
Nothing having come out of the negotiations between the plaintiff and the Administrator General of Bengal the latter in September, 1936, invited offers for sale of the lands (Exhibit B).
The defendant No. I made the highest offer of Rs. 12,251.
and this was accepted by the Administrator General in preference to the offer made by the plaintiff for Rs. 11,251.
The Administrator General accordingly executed a conveyance in favour of the defendant Pratul Chandra Ghose (Exhibit P. X) who thereupon became the tenant of the premises.
Having failed to obtain title to the premises from the Administrator General of Bengal the plaintiff approached the landlords and on 22nd September, 1937, obtained a Mokarari Mourashi Patta in respect of the disputed land on payment of a Selami of Rs. 3,205 and at an annual rent of Rs. 78 only.
The defendant Pratul Chandra Ghose filed rent suits against the plaintiff in respect of the underlease held by the latter under the Administrator General of Bengal and obtained rent decrees.
The plaintiff, however, on the strength of his new title derived from the superior landlords under the Mourashi Patta served 937 notice on the defendant Pratul Chandra Ghose on the 7th October, 1937, requiring him to vacate the premises on the last day of the month of Chaitra 1944 B. section The defendant Pratul Chandra Ghose, not having vacated the premises, the plaintiff filed the suit out of which the present appeal has arisen.
Shri N. C. Chatterjee contends that in view of the decision in the suit of 1859 it was not open to the defendant Pratul Chandra Ghose to contend that his tenancy was a heritable permanent tenancy.
This point was neither pleaded nor raised in the trial Court but was put forward for the first time before the High Court.
The pleadings of the 1859 suit are not on the record but the substance of ' the written statement appears from the judgment Exhibit 24 passed in that case.
The issues framed in that case have already been set out.
There was no issue regarding the character of the tenancy, namely, whether it was permanent and heritable or otherwise.
The only question there was whether rent could be assessed tinder the Regulation.
There is nothing in that Regulation suggesting that rent could be assessed only if the tenancy was a ticca tenancy or that rent could not be assessed if the tenancy was a permanent one.
The question of permanency of the tenancy was not, therefore, directly or substantially in issue.
We find ourselves in agreement with the High Court that the permanency of tenure does not necessarily imply both fixity of rent and fixity of occupation.
The fact of enhancement of rent in 1859 may be a circumstance to be taken into consideration but it does not necessarily militate against the tenancy being a permanent one, as held by the Privy Council in the case of an agricultural tenancy in Shankarrao vs Sambhu Wallad(l).
The principle of that decision was applied also to non agricultural tenancies in Jogendra Krishna Banerji vs Sm.
Subashini Dassi(2).
In Probhas Chandra Mallik vs Debendra Nath Das(3) also the same view was taken.
We, therefore, hold that the plea of res judicata cannot be sustained.
(1) (2) (3) , 121 938 Shri N. C. Chatterjee then contends, relying on the decisions in Rasmoy Purkatt vs Srinath Moyra (1), Digbijoy Roy vs Shaikh Aya Rahman (2), Satyendra Nath vs Charu Sankar (3 ) and Kamal Kumar Datta vs Nanda Lal Dule ( 4 ) that the tenancy in this case cannot be regarded as a permanent one.
The decisions in those cases have to be read in the light of the facts of those particular cases.
The mere fact of rent having been received from a certain person may not, as held in Rasamoy Purkatt vs Srinath Moyra (supra) and Digbijoy Roy vs Shaikh Aya Rahman (supra), amount to a recognition of that person as a tenant.
Mere possession for generations at a uniform rent or construction of permanent structure by itself may not be conclusive proof of a permanent right as held in Kamal Kumar Dutt vs Nanda Lal Dule (supra) but the cumulative effect of such fact coupled with several other facts may lead to the inference of a permanent tenancy as indicated even in the case of Satyendra Nath vs Charu Sankar (supra) on which Shri N. C. Chatterjee relies.
What, then, are the salient facts before us ? It is not known how the earliest known tenant Shaik Manik acquired the tenancy or what the nature of that tenancy was.
The tenancy has passed from one person to another by inheritance or by will or by transfers inter vivos.
In the deeds of transfer the transferee has been given the right to enjoy the property from generation to generation for ever.
A tank has been excavated and a pucca ghat built on the land.
Bricks have been manufactured with the earth taken from the land and the premises have been enclosed within pucca walls.
Pucca buildings have been erected and mortgages have been executed for substantial amounts.
Although there was an enhancement of rent in 1860 that rent has continued to be paid ever since then.
Portion of the premises, namely, No. 2, Watkin 's Lane, has been used as a factory by the plaintiffs and on the other portion, namely, No. 3, Watkin 's Lane, residential buildings were erected which indicate that the lease was for residential purposes.
As already (1) (2) (3) (4) Cal.
939 indicated there have been many transfers and devolutions and the landlords have accepted rent ' from the transferees or the successors.
The names of Mrs. Cynthia Mills and Dobson and, Jones were mutated in the Zamindar 's Sherista.
Although in the rent receipts Dobson continued to be shown as the recorded tenant, eventually Jones 's name appears on the rent receipts as tenant.
In spite of the increase in land value and the letting value the landlords through whom the plaintiff derives his title did not at any time make may attempt to eject the tenant or to get any further enhancement of rent since 1860.
All these circumstances put together are explicable only on the hypothesis of permanency of the tenure and they irresistibly lead to the conclusion, as held by the lower Courts, that the tenancy in question was heritable and a permanent one.
The decision of Mukherjea, J., in the case of Probhas Chandra Mallick vs Debendra Nath Das (supra) is definitely in point.
In this view of the matter we hold that the Courts below were right in dismissing the plaintiff 's claim for ejectment. ' In the result this appeal must fail and we dismiss it with costs.
Appeal dismissed.
| Permanency of tenure does not necessarily imply both fixity of rent and fixity of occupation and the fact of enhancement of rent does not necessarily militate against the tenancy being a permanent one.
When, therefore, in a previous suit the only question was whether the jama could be increased and the jama was increased: Held, that this decision did not operate as res judicata on the question of permanency of the tenure in a subsequent suit for ejectment.
Shankar Rao vs Sambhu Wallad ; Jogendra Krishna Banerji vs Subashini Dassi , Probhas Chandra Mallick vs Debendra Nath Das (1939) 43 C.W.N.828, relied on.
Mere possession for generations at a uniform rent, or construction of permanent structures by itself may not be conclusive proof of a permanent right but the cumulative affect of such facts coupled with other facts may lead to the inference of a permanent 931 tenancy Where it was not known how the earliest known tenant acquired the tenancy or what the nature of the tenancy was, the tenancy bad passed from one person to another by inheritance or by will or by transfer inter vivos, in the deeds of transfer the transferee was given the right to enjoy from generation to generation for ever, pucka structures and tanks had been constructed, and though there was an enhancement of rent in 1860, the rent bad not been increased since then: Held, that all these circumstances put together irresistibly led to the conclusion of a permanency of the tenure.
Probhas Chandra Mallik vs Debendra Nath Das (1939) 43 O.W.N. 828 referred to.
|
Appeal No. 12 of 1952.
Appeal from the Judgment and Order dated the 18th January, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 27 of 1947.
O.T. G. Nambiar (section N. Mukherjee, with him) for the appellant.
M.C. Setalvad, Attorney General for India, and C. K.Daphtary, Solicitor General for India (G. N. Joshi and P.A. Mehta, with them) for the respondent.
December 22.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal from the judgment of the High Court of Judicature at Madras dated 18th January, 1950, delivered on a reference by the Incometax .Appellate Tribunal under section 66(1) of the Indian Income tax Act, whereby the High Court answered the two questions referred in the affirmative. ' The appellant is a public limited company incorporated in the United Kingdom and owns a spinning and weaving mill located at Pondicherry in French Indial.
The year of account of the appellant is the calendar year.
In the year 1939 no sales of yarn or cloth manufactured by the company were effected in 456 British India, though in the previous year such sales were effected.
All the purchases of cotton required for the mills were made in British India by Messrs. Best & Co., Ltd. Under an agreement between the appellant and Messrs. Best & Co., Ltd., Madras, dated 11th July, 1939, Messrs. Best & Co., Ltd. were constituted the agents of the appellant for the purposes of its business in India.
Messrs. Best & Co., Ltd. have under the terms of the agreement full powers in connection with the business of the appellant in the matter of purchasing stock, signing bills and other negotiable instruments and receipts and settling, compounding or compromising any claim by or against the appellant.
The agents are empowered to borrow money on behalf of the appellant and to make advances.
They are also expected to secure the best commissions, brokerages, rebates, discounts and other allowances in respect of and in connection with the business of the appellant.
They are enjoined to keep proper accounts of the appellant and to pay over to the appellant the sum standing to its credit.
They are remunerated by a salary of Rs. 6,500 per mouth and a percentage commission on the profits made.
During the relevant year all the purchases of cotton required for the mill at Pondicherry were made by the agents in British India and no purchases were made through any other agency.
The agents exercised their judgment and skill and purchased such qualities and quantities of cotton and at such prices as they in their experience considered most advantageous in the interests of the company.
Prior to 1939 40 the appellant was assessed to income tax in British India on the profits computed on a turnover basis earned by the sales in British India of the goods manufactured by the appellant.
In the course of the assessment year 1939 40 the appellant stated that it discontinued its business in British India with effect from 1st April, 1939, and claimed relief under section 25`3) which was granted.
In the course of his further enquiries the Income tax Officer found 'that though the appellant was not 457 selling its goods in British India and earning a profit thereby, it continued to have an active business connection in British India having regard to the way in which the business of purchasing goods and materials for them ills was carried on.
There upon the Incometax officer held that such purchases of cotton in British India constituted a business connection in British India and that the profits attributable to the purchases were liable to tax under sections 42(1) and 42(3) of the Act.
The net income of the company was computed to be Rs. 2,81,176 and ten per cent.
of this sum was apportioned under section 42(3), of the Act as being the profits and gains reasonably attributable to that part of the business operations, which were carried out in British India.
The appellant appealed against the said order of the Income tax Officer to the Appellate Assistant Commissioner who confirmed the order of the Income tax Officer.
A further appeal by the appellant to the Tribunal was unsuccessful.
At the instance of the appellant, the Tribunal stated a case and referred the following questions for the decision of the High Court under section 66(1) of the Act : " 1.
Whether in the circumstances of this case the assessee company had any business connection in British India within the meaning of sections 42(1) and 42(3) of the Income tax Act ? 2.Whether any profits could reasonably be attributed to the purchase of entire cotton made in British India by the secretaries and agents of the assessee company within the meaning of sections 42(1) and 42(3) of the Income tax Act ? The High Court answered both these questions in the affirmative and, in our opinion, rightly.
The learned counsel for the appellant reiterated before us the arguments that he had addressed in the High Court and contended that on the facts of this case there was no scope for the finding that any profits or.
gains accrued to the assessee directly or 458 indirectly through or from any business connection in India.
It was argued that a mere purchase of raw materials or goods in British India does not result in the accrual or arising of profits and that the profits on the sale of goods arise and accrue only at the place where the sales are effected and that in the present case, there being no sales effected in British India in the year of account 1939, no profits accrued or arose to the company in British India nor could ally profits be deemed to have accrued or arisen in British India.
In support of his proposition, the learned counsel placed reliance on a number of cases, inter alia, on Board of Revenue vs Madras Export Co.(1), Jiwan Das vs Commissioner of Income tax, Lahore (2), Rahim vs Commissioner of Income tax(3), Commissioner of Incometax, of Income tax vs Little 's Oriental Balm Ltd.(5).
Most of these decisions were given under the Act of 1922, before the insertion of section 42 (3) in the Act of 1922 by the amending Act of 1939.
As against the cases relied upon by the learned counsel for the appellant, several authorities have been cited to us which have proceeded on the footing that even purchase of raw materials could be an operation in connection with a business and if it was carried on in British India it might make the profits attributable to such operation taxable under section 42 of the Indian Income tax Act.
The case Rogers Pyatt Shellac Co. vs Secretary of State for India(6) is one of the leading decisions on this point.
This case was decided under section 33 of the Indian Income tax Act, 1918, and the judgment shows that the principle followed in the case was similar to that which was subsequently embodied in section 42 (3) of the Income tax Act, 1922.
The question referred to the High Court in that case was in these terms: "Is this company which purchased shellac and mica in India for sale in the open market in America (1) Mad.
(2) (I929) 1.
L. R. (3) A.I.R. 1949 Orissa 60.
(4) A.T.R. (5) [1950) (6) (1925) I.L.R.52 Cal.
459 liable to be assessed to income tax and super tax under either Income tax Act VII of 1918 or Act XI of 1922 and the Super tax Act, VIII of 1917.
" And it was answered in the affirmative.
The same line of reasoning was adopted by the Rangoon High Court in Commissioner of Income tax Burma vs Steel Bros. Co. '(1).
Among recent cases on this point which were decided under section 42 of the Income tax Act, 1922, can be mentioned the case of Motor Union Insurance Co. Ltd. vs Commissioner of Income tax, Bombay(2) and that of Webb Sons & Co. vs Commissioner of Income tax, East Punjab(3).
In the last case, the assessee company which was incorporated in the United States of America was carrying on in America the business of manufacturing carpets.
Its only business in British India was the purchase through its agent in British India, of wool as raw material for use in the manufacture of carpets.
It was held that the purchase was an operation within the meaning of section 42 (3), and the profits from such purchases could be deemed to arise in British India and it was consequently assessable under section 42 (3) of the Indian Income tax Act.
The questions referred to the High Court in this case and relevant to this enquiry were these: "(i) Is mere purchase of raw material an operation within the meaning of section 42 (3) of the Act? (ii)Can any profit arise out of mere purchase of raw material?" While answering these questions in the affirmative it was said: "It is clear that the purchase of raw material by a firm of manufacturers is one of the processes or operations which contributes to an appreciable degree to the ultimate profit which is realized on the sale of manufactured articles.
" There is thus no uniformity of judicial opinion on the question that the mere act of purchase produces no profit.
(1) Rang.
(2) A.I.R. 1945 Bom.
(3) [1950) 460 In our judgment, the contention of the learned counsel for the appellant, and on which his whole .argument is founded, that it is the act of sale alone from which the profits accrue or arise can no longer be sustained, and has to be repelled in view of the decision of this Court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co.(1).
That was a case that arose under the Excess Profits Tax Act, XV of 1940.
A firm which was resident in British India and carried on the business of manufacturing and selling groundnut oil, and owned some oil mills within British India also owned a mill in Raichur in the Hyderabad State where oil was manufactured.
The oil manufactured in Raichur was sold partly within the State of Hyderabad and partly in Bombay.
It was held by this Court that the profits of that part of the business, viz., the manufacture of oil at the mill in Raichur accrued or arose in Raichur even though the manufactured oil was sold in Bombay and the price was received there, and accordingly, that part of the profits derived from sales in Bombay which was attributable to the manufacture of the oil in Raichur was exempt from excess profits tax under the proviso to section 5 of the Act.
Reference in this case was made to the decision of the House of Lords in In re Commissioners of Taxation vs Kirk (2), wherein it was held that where income was in part derived from the extraction of ore from the soil of New South Wales Colony, and from the conversion in the latter colony of the crude ore into a merchantable product, this income was assessable under the New South Wales Land and Income Tax Assessment Act of 1895, section 15, sub sections 3 and 4, nowithstanding that the finished products were sold exclusively outside the colony.
Lord Davey while delivering the judgment of the Privy Council observed as follows : "It appears to their Lordships that there are four processes in the earning or production of this income (I) the extraction of the ore from the soil ; (2) the (1) ; (2) 461 conversion of the crude ore into a merchantable product, which is a manufacturing process; (3) the sale of the merchantable product; (4) the receipt of the moneys arising from the sale.
All these processes are necessary stages which terminate in 'money, and the income is the money resulting less the expenses attendant on all the stages.
The first process seems to their Lordships clearly within sub section 3, and the second or manufacturing Process, if not within the meaning of ' trade ' in subsection 1, is certainly included in the words any others source whatever in sub section 4.
So far as relates to these two processes, therefore, their Lordships think that the income was earned and arising and accruing in New South Wales.
" On a parity of reasoning it can well be said in this case that the profits accrue or arise to the appellant from three business processes or operations, those being (1) the purchase of cotton in British India; (2) its conversion by the process of manufacture in Pondicherry into yarn or cloth ; and (3) the sale of the merchantable product, and those have to be apportioned between these three operations.
The same line of reasoning was adopted by the Madras High Court in Bangalore Woollen, Cotton & Silk Mills Co. Ltd. vs Commissioner of Income tax, Madras(1).
There it was held that the purchase of raw materials by the man aging agents in British India would be an operation within the meaning of section 42(3) and it was reasonable to attribute a portion of the profits to such purchases in British India.
After a careful consideration of the decided cases on the subject and in view of the insertion of section 42 (3) in the Act of 1922 by the amending Act of 1939, we have reached the conclusion that in the present state of the law there is hardly any scope for maintaining the view contended for by the learned counsel for the appellant and we therefore agree with the High Court in repelling it.
While maintaining the view taken by the High Court in this case we wish (1) 462 to point out that it is not every business activity of a manufacturer that comes within the expression "operation" to which the provisions of section 42(3) are attracted.
These provisions have no application unless according to the known and accepted business notions and usages the particular activity is regarded as a well defined business operation.
Activities which are not well defined or are of a casual or isolated character would not ordinarily fall within the ambit of this rule.
Distribution of profits on different business operations or activities ought only to be made for sufficient and cogent reasons and the observations made here are limited to the facts and circumstances of this case.
In a case where all that may be known is that a few transactions of purchase of raw materials have taken place in British India, it could not ordinarily be said that the isolated acts were in their nature " operations " within the meaning of that expression.
In this case the raw materials were purchased systematically and habitually through an established agency having special skill and competency in selecting the goods to be purchased and fixing the time and place of purchase.
Such activity appears to us to be well within the import of the term " operation " as used in section 42 (3) of the Act.
It is not in the nature of an isolated transaction of purchase of raw materials.
The first contention of the assessee is therefore negatived.
The learned counsel argued in a rather half hearted manner that there was no business connection of the assessee in British India.
This contention does not require serious consideration.
An isolated transaction between a non resident and a resident in British India without any course of dealings such as might fairly be described as a business connection does not attract the application of section 42, but when there is a continuity of business relationship between the person in British India who helps to make the profits and the person outside British India, who receives or realizes the profits, such relationship does constitute business connection.
In this case there 463 was a regular agency established in British India for the purchase of the entire raw materials required for the manufacture abroad and the agent was chosen by reason of his skill, reputation and experience in the line of trade.
The terms of the agency stated in by earlier part of this judgment fully establish that Messrs. Best & Co. Ltd. were carrying on something almost akin to the business of a managing agency in India of the foreign company and the latter certainly had a connection with this agency.
We therefore negative this contention of the learned counsel as well.
For the reasons given above we uphold the view taken by the High Court and dismiss the appeal with costs.
Appeal dismissed.
| Though a few isolated transactions of purchase of raw mate rials in India by a manufacturer carrying on business outside India may not amount to the carrying on of an " operation " in India within the meaning of section 42 (3) of the Indian Income tax Act, where raw materials are purchased systematically and habitually in India through an established agency having special skill and competency in selecting the goods, such an activity will be an "operation" within a. 42 (3), and the portion of the profits 455 attributable to the purchases in India can be assessed to incometax under section 42(1) and (3) of the Indian Income tax Act.
Bangalore Woollen, Cotton & Silk Mills Co. Ltd. vs Commis sioner of Income tax, Madras , Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai d Co. ([1950] S.C.R. 335), Commissioners of Taxation vs Kirk ([1900] A.C. 588), Rogers Pyatt Shellac Co. vs Secretary of State for India ([1925] I.L.R. and Webb Sons & Co. vs Commissioner of Incometax, East Punjab ([1950] relied on.
An isolated transaction between a non resident and a resident in India without any course of dealings such as might fairly be described as a business connection does not attract the application of section 42, but when there is a continuity of business relationship between the person in India who helps to make the profits and the person outside India who receives or realises the profits, such relationship constitutes a business connection.
|
l Appeal ,#No. 151 of 1951.
Appeal from a Judgment and Order dated 14/15th September, 1949, of the High Court of Judicature at Bombay (Chagla C.J. and Tendolkar J.) in Income tax Reference No. 2 of 1949.
R. J. Kolah and N. A. Palkiwalla for the appellant.
C. K. Daphtary, Solicitor General for India (P.A Mehta, with him) for the respondent.
January 30.
The judgment of Mehr Chand Mahajan J., Das J. and Bhagwati J. was delivered by Bhagwati J. Bose J. delivered a separate judgment.
BHAGWATI J. This is an appeal from the judgment and order of the High Court of Judicature at Bombay upon a reference by the Income tax Appellate Tribunal under Section 66 (1) of the Indian Income tax Act, 1922, whereby the High Court upheld the decision of the Appellate Tribunal that two amounts of Rs. 12,68,480 and Rs. 4,40,878 were the sale proceeds of goods sold by the appellant to merchants in British India, were received in British India and were liable to income tax in British India.
The appellant is a company registered in the Baroda State, as it then was, prior to its merger with India.
It manufactures textile goods in Petlad in the Baroda State and after the goods are manufactured they are sold by the company ex mills.
The company employs Messrs. Jagmohandas Ramanlal & Co. as guaranteed brokers.
That firm guarantees the sale price of goods sold by the company ex mills to the purchasers from Ahmedabad and receives commission as consideration for the guarantee and the work which it does for the company.
The company is a non resident and its accounts are maintained according to the mercantile system.
953 In the assessment year 1942 43 (the previous year being the calendar year 1941) the total sales of the goods by the company amounted to Rs. 29,68,808.
In making the assessment on the company for that assessment year the following three amounts were considered for the purpose of determining the company 's liability to British Indian tax.
(a) Sale proceeds recovered through Messrs. Jagmohandas Ramanlal & Co. . . . .Rs.
12,68,480 (b) Sale proceeds through British Indian banks and shroffs rec eived by means of drafts or hu ndies drawn by the company. . .Rs.
4,40,878 (Railway receipts handed over to British Indian merchants by the banks on payment).
(c) Sale proceeds received by cheques on British Indian banks and hundies on British Indian shroffs and merchants, and collected by the banks and shroffs . . . . . .
Rs. 6,719735 Total Rs. 23,81,093 As regards item (a) the company debited the account of the firm of Messrs. Jagmohandas Ramalal & Co. with Rs. 13,41,744 which represented sales made by the company to merchants of Ahmedabad whose payments were guaranteed by that firm, and credited the sales account with the amount of the bills.
Messrs. Jagmohandas Ramanlal & Co. collected the amounts of the bills from the merchants at Ahmedabad and credited the sums recovered in the company 's accounts with banks and/or shroffs at Ahmedabad and also made dis bursements under instructions of the company to the creditors of the company in British India.
All these payments were credited by the company to the account of Messrs. Jagmohandas Ramanlal & Co. and during the relevant accounting year the company thus 954 received Rs. 12,68,480 against the total debits of Rs. 13,41,744.
As regards item (b) the company received Rs. 4,40.878 by drawing hundies or drafts for the amounts of its sales bills (including the forwarding charges and the cost of transit from the mills premises to the station) on the merchants in favour of recoginised banks and shroffs in British India, by sending the same to those banks or shroffs with the railway receipts duly endorsed in favour of the merchants and by instructing the banks or shroffs to recover the amounts including the costs of transmitting the same to them.
The amounts of these sales bills were debited by the company to the accounts of the respective merchants and credited to the sales account and the sums recovered by the banks or shroffs from the merchants in British India against the delivery of the relative railway receipts were on receipt of the same by the company credited to the accounts of the respective merchants in their books of account.
As regards item (c), the company received Rs. 6,71,735 from the merchants by cheques and hundies drawn on banks and shroffs in British India in favour of the company.
These cheques and hundies were negotiated by the company in Petlad and sent back for credit to its accounts with those banks and shroffs.
The said cheques and hundies were cashed in British India and the sale proceeds remitted by the banks and shroffs to the company.
The amounts of the sales bills were debited to the accounts of the merchants in the books of the company when the goods were invoiced to the merchants and these accounts were credited with the moneys thus received by the company from the merchants.
The Income tax Officer brought to tax the profits derived by the company represented by the said three items in the assessment year on the basis that the sale proceeds having been received in British India the profits were received in British India.
The Appellate Assistant Commissioner on appeal held that profits 955 from items (a) and (c) were exempt from British Indian tax while those represented by item (b) were rightly taxed.
The Department filed an appeal to the Appellate Tribunal against the decision of the Appellate Assistant Commissioner in regard to items (a) and (c) and the company filed an appeal in respect of item (b).
The Appellate Tribunal held in regard to item (a) that the merchants in British India were not absolved either in law or in fact from their responsibility to pay to the company its dues by virtue of the debit entries in the account of Messrs. Jagmohandas Rainanlal & Co. and in regard to item (b) that the payment of the amounts due was a condition precedent to ' the delivery of goods by the banks in British India on behalf of the company.
The Tribunal therefore held that profits arising from items (a) and (b) were rightly subjected to tax.
As regards item (c) the Tribunal held that Rs. 6,71,735 "were received by the assessee company directly from the merchants in British India by cheques and hundies drawn on banks and shroffs in British India in favour of the company but were negotiated in Petlad and sent for credit to the company 's account.
The amounts were received at Petlad and once they were received there, they could not be held to have been received again in British India ".
The Department asked the Tribunal to refer to the High Court the question of law arising on item (c) and the company asked the Tribunal to refer to the High Court the question of law arising on items (a) and (b) and the Tribunal therefore referred the following question of law to the High Court: " Whether on the facts and in the circumstances of the case, the sums of Rs. 12,68,480, Rs. 4,40,878 and Rs. 6,71,735, or any of them, which, represents receipts by the assessee company of its sale proceeds in British India, include any portion of its income in British India?" The High Court held that Rs. 12,68,480 were received in British India and included the profits and gains of the business of the assessee company.
It held that Rs. 4,40,878 also were received in British India 956 and the company was liable in respect of that amount.
In regard to the item of Rs. 6,71,735, the High Court found that the facts stated by the Tribunal were not sufficient to enable it to reach a decision and therefore directed that the Tribunal should submit a supplementary statement of case setting out the several aspects set out in the judgment.
The High Court reframed the question in regard to the two items of Rs. 12,68,480 and Rs. 4,40,878 in the manner following: (1)Whether the sums of Rs. 12,68,480 and Rs. 4,40,878 were sale proceeds of the goods sold by the assessee to merchants in British India or were debts due by the said merchants ? (2)Whether if they were sale proceeds, they were received in British India ? and answered them by stating that they were sale proceeds and they were received in British India.
There was also a third question which was comprised in the reference and that question was framed as under: Whether the profits of the assessee 's business are included in the sums of Rs. 12,68,480 and Rs. 4,40,878 ? This question was also answered by stating that they were included in these two sums.
The company obtained leave from the High Court to appeal against the decision in regard to the two sums of Rs. 12,68,480 and Rs. 4,40,878 and hence this appeal.
It is common ground that the company is a nonresident and its accounts have been regularly kept according to the, mercantile system.
Its balance sheets were also prepared on that basis.
The company was assessed to tax in British India on the basis that these two sums of money were received in British India by or on behalf of the company.
In regard to the item of Rs. 12,68,480, even though the amounts of the sales bills were in the first instance debited by the company in its books to the account of Messrs. Jagmohandas Ramanlal & Co. the sale proceeds in accordance with 957 the terms of the sales bills were paid by the respective merchants to Messrs. Jagmohandas Ramanlal & Co. in British India and were either credited by Messrs. Jagmohandas Ramanlal & Co. in the company 's accounts with banks or shroffs in British India or were disbursed by them in accordance with the instructions of the company in British India.
In regard to the item of Rs. 4,40,878 even though the amounts of the sales bills were debited in the first instance by the company to the accounts of the respective merchants in the books of account at Petlad the relative railway receipts were sent by the company to banks or shroffs in British India together with drafts or hundies in connection with the same with instructions that delivery of the railway receipts should be given to the respective merchants against payment and the amounts of the sales bills were thus paid by the respective merchants to the banks or shroffs in British India and were transmitted under the instructions of the company by the banks and shroffs in British India to the company at Petlad.
Prima facie therefore the amounts of the sales bills in both the cases whether they were paid to Messrs. Jagmohandas Ramanlal & Co. or to the banks or shroffs, through whom the railway receipts were negotiated were paid by the merchants in British India and were received by Messrs. Jagmohandas Ramanlal & Co. and the banks or shroffs on behalf of the company,in British India.
The receipt of these amounts thus fell within section 4 (1) (a) of the Act and the profits or gains of this business thus were received in British India by or on behalf of the company.
The company however sought exemption from liability to tax on the grounds (a) that the accounts of the company were kept on the mercantile or book profit basis under which the accrual of profit as shown in the account was the criterion of taxability and section 4(l) (a) had no application at all; (b) that it was obligatory on the authorities under section 13 of the Act to accept that system of maintaining accounts except under the proviso to that section and that the method of computation there was made the very basis of 124 958 chargeability and section 10 read with section 13 operated to save these amounts from chargeability and (c) that the amounts having been treated as received when credit entries were made in the books of account, and chargeability having crystallised on the date when the income accrued or was treated as received, there was no further scope for a charge when the amounts were subsequently actually received and the subsequent handling of the amounts by the company and the receipt thereof in British India were of no consequence.
The mercantile system of accounting or what is otherwise known as the double entry system is opposed.
to the cash system of book keeping under which a record is kept of actual cash receipts and actual cash payments, entries being made only when money is actually collected or disbursed.
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 profits or gains of the business which are thus credited are not realised but having been earned are treated as received though in fact there is nothing more than an accrual or arising of the profits at that stage.
They are book profits.
Receipt being not the sole test of chargeability and profits and gains that have accrued or arisen or are deemed to have accrued or arisen being also liable to be charged for income tax, the assessability of these profits which are thus credited in the books of account arises not because they are received but because.
they have accrued or arisen.
Mr. Kolah appearing for the company drew our attention to the following cases: Subramaniyan Chettiar vs Commissioner of Incometax(1), Ahmed Din Alladitta vs Commissioner of Income tax, Punjab(2), Kanwal Nayan Hamir Singh vs Commissioner of Income tax, Ajmer Merwara(3) and (1)(1927) (2)[1934] (3) 959 Commissioner of Income tax vs Shrimati Singari Bai(1).
The assessees there were all residents in British India and maintained their books of account according to the mercantile system.
Except in the case of Commissioner of Income tax vs Singari Bai(1) where the assessment was in respect of the total income or profits, stray items of income treated as received in British India were sought to be charged for tax and they were all assessed for tax not on the basis of actual receipts in British India but on the basis of their having accrued or arisen in British India.
The cases were decided with reference to the law as it stood before the amendment in 1939 which under section 4(l) rendered liable to tax all income, profits or gains from whatever source derived, accruing or arising or received in British India or deemed under the provisions of the Act to accrue, arise or to be received in British India.
The question that arose for the determination of the courts was whether under the mercantile system, profits which were credited in the books could be taxed even though they had in fact not been received and the conclusion reached by the courts was that these profits credited in the books of account were earned and could be charged as having accrued or arisen within British India even though they were in fact not received.
In none of these cases were the courts con cerned with a non resident claiming to have received profits or gains outside British India under the mercantile system of accounting and claiming exemption from liability to tax under section 4 (1) (a) in respect of profits actually received in British India.
It follows from the above that the mercantile system of accounting treats profits or gains as arising or accruing at the date of the transaction notwithstanding the fact that they are not received or deemed to be received and under that system, book profits are, assessed as liable to tax.
If an assessee therefore regularly adopts the mercantile system of accounting he would be liable to tax on the profits thus credited by (1). [1945] 960 him in his books of account subject to all deductions for bad debts as provided in section 10 (2) (xi).
Section 4 (1) (a) has nothing to do with this basis of taxation.
Section 13 which is an integral part of the computation of the total income of the assessee and is compulsory on the income tax authorities as well when computing the total income (vide section 2 (15) ) does not lay down any exemption from liability.
It only sets up a mode of computation of the income which is liable to assessment and imposes upon the income tax authorities an obligation to accept the mode of accounting regularly adopted by the assessee except in the cases where the proviso to that section comes into operation.
The profits earned and credited in the books of account being thus taken as the basis of computation, the system of accounting postulates the existence of debts in so far as moneys re ain due and payable by the parties to whom they have been debited and when it is realised that these debts are not recoverable the assessee gets a deduction for the bad debts under section 10 (2) (xi).
This however does not mean that the transaction as it has been recorded in the books of account under the mercantile system of accounting or the double entry system is metamorphosed or the relationship between the parties assumes a different character.
What was in its inception a transaction of sale and purchase is not converted into another transaction as between creditor and debtor.
The relationship as between vendor and purchaser still subsists and there does not come into existence a new relationship as between creditor and debtor with all its necessary consequences.
The transaction as it has been recorded in the books of account has got to be worked out to its fullest extent.
Merely because the goods have been supplied and the price thereof has been de bited to the purchaser the rights and obligations of the vendor and purchaser inter se are not in any manner affected.
The vendor is bound to fulfil all his obligations under the contract and continues to be liable for all the consequences of his default including rejection of his goods by the purchaser or a claim for damages 961 for breach of warranty by him.
The purchaser is equally entitled to reject the goods or to claim the damages as on breach of warranty by the vendor and all these rights and obligations have got to be worked out in spite of the fact that the entries 'are made in the books of account by the vendor in accordance with the mercantile system of accounting adopted by him.
The vendor could not say that he is under no further obligation to the purchaser and that the purchaser must pay the price of the goods debited to him as a debt arising out of the book entry.
The count in any action filed by the vendor against the purchaser would be a count for the price of goods sold and delivered and would not be a count on an assumpsit for recovery of a debt due by the debtor to him.
It is clear that under these circumstances there is no receipt of the moneys at all, either actual or constructive, in cash or in kind, by actual payment or by adjustment or settlement of accounts.
There is also no scope for the argument that even though these sums may not be said to be either actually or constructively received they should be "deemed to be received".
The expression "deemed to be received" only means deemed by the provisions of the Act to be received.
The phrase statutory receipt might be con veniently employed to cover income which is 'deemed to be received ' and instances of such statutory receipts are to be found in the provisions of the Act, e.g., section 18 (4), section 58 (E), section 58 (J) (3), section 7(2), section 16(1) (c) and sections 19 (2) (vii) and 16(2).
(See the observations of Beaumont C.J. in Commissionei, of Income tax, Bombay vs New India Assurance Co. Ltd.(1).
An amount cannot be "deemed to be received" merely by the volition or sweet will of an individual.
In all the cases which we have mentioned above the profits earned which were credited in the books of account according to the mercantile system of accounting were at best "treated as having been received" which is neither "received" nor "deemed to be received" and therefore not within the purview of section 4 (1) (a).
(1) at p. 614.
962 If then profits which have been thus credited cannot be said to be received nor deemed to have been received when the entries were made in the books of account, the contention urged before us by Mr. Kolah that there could not be a second receipt of the amount in British India does not survive.
It is true that the words used in section 4(l) (a) relate to the first receipt after the accrual of the income.
Once it is received by the party entitled to it, in respect of any subsequent dealing with the said amount it cannot be said to be " received" as income on that occasion.
[Per Kania J. in B. M. Kamdar (1)].
The "receipt" of income refers to the first occasion when the recipient gets the money under his own control.
Once an amount is received as income, any remittance or transmission of the amount to another place does not result in "receipt", within the meaning of this clause, at the other place.
This was definitely established by the Privy; Council in Pondicherry Railway Co. vs Commissioner of IncomeTax 2) and in Commissionei, of Income tax vs Mathias (3).
If, therefore, the income, profits or gains have been once received by the assessee even though outside British India they do not become chargeable by reason of the moneys having been brought in British India, because what is chargeable is the first receipt of the moneys and not a subsequent dealing by the assessee with the said amount.
In that event they are brought, by the assessee as his own moneys which he has already received and had control over and they cease to enjoy the character of income, profits or gains.
This ratio however does not apply to the facts of the present case before us.
The moneys were neither received by the company nor could be deemed to have been received by it when the entries were made in the books of account at Petlad.
They had merely accrued or arisen to it and so far as the receipt thereof is concerned they were first received in British India when they were received by Messrs. Jagmohandas Ramanlal (1)[1946] at P. 39, (2)[1931] 58 I.A. 239.
(3) [1939] 66 I.A. 23.
963 & Co. or by the various banks or shroffs in British India through whom the railway receipts were negotiated.
The first receipt of the moneys was therefore when they were paid as such by.
the merchants to Messrs. Jagmohandas Ramanlal & Co. or to the various banks or shroffs as above.
Whatever paid by the merchants to these several parties were the sale proceeds of the goods which had been sold and delivered by the company to them and they were received within the meaning of section 4 (1) (a) of the Act by these several parties on behalf of the company in British India at the time when these payments were made by the merchants to them.
Mr. Kolah pressed into service the argument based on section 13 of the Act that the mercantile system of accounting regularly adopted by the assessee was obligatory on the income tax authorities for computation of his income.
While agreeing generally with that submission in case of residents, we doubt whether that position would be available to a non resident, who maintains his books of account outside British India according to the mercantile system.
The section would only be relevant where the total profits of the assessee have to be computed, in which event he would be entitled to claim that they should be computed according to the system of accounts maintained by him.
But the section would hardly be relevant where stray items of income are caught in taxable territories as received in taxable territories by a nonresident.
The entries in the present case were put in merely to prove that the sale proceeds were received outside British India where the entries were made.
That contention however could not be sustained, as section 4 (1) (a) is concerned with cases of actual receipt and not with cases of paper receipts.
Having regard to the observations made above we have come to the conclusion that the High Court ",as right in holding that the two sums of Rs. 12,68,480 and Rs. 4,40,878 were the sale proceeds of the goods sold and delivered by the appellant to merchants in British India, that they were received by Messrs, 964 Jagmohandas Ramanlal & Co. and by the banks and shroffs through whom the railway receipts were negotiated, on behalf of the appellant in.
British India, that they were liable to tax under section 4 (1) (a) of the ,*Act as having been received in British India on its behalf, that there is nothing either in the facts and circumstances of the case or in law why they should be exempted from such liability, that the answers given to the questions which were ultimately considered by the High Court were correct, and the appellant was rightly held liable for the tax on these two amounts subject to all just deductions and allowances.
The appeal therefore fails and must stand dismissed with costs.
BOSE, J. I respectfully disagree.
Section 3 of the Indian Income tax Act provides that the " total income " is to be charged in accordance with the provisions of the Act.
We have therefore to see what " total income " means.
" Total income " is defined in section 2(15).
It means (not " includes " but means) the total amount of income, profits and gains "referred to in sub section (1) of section 4 computed in the manner, laid down in this Act." Therefore, the computation of all income refeffed to in section 4(l.) has to be "in the manner laid down in the Act ".
Section 4 (apart from the provisos and explanations is divided into three clauses, (a), (b) and (c).
Clause (b) deals with residents and (c) with nonresidents.
As (a) is general, it is legitimate to infer that it refers to both.
Therefore, the words " received" and " deemed to be received " must be construed in the same sense in both cases except of course where it is otherwise provided in the Act, for sub section (1) is made subject to the provisions of the Act.
Now the words "deemed to be received" can be excluded from consideration at once because I agree that they are confined, and are intended to be confined to what I may call the deeming sections in the Act, that is to say, to cases where the deeming must be done 965 under the express provisions of the Act.
That leaves us with the word "received" (I am of course only deal ing with section 4(l) (a) which deals with " receipts ' and not with section 4(l) (c) which refers to "accruals" and "arisals" and to that which is deemed to "accrue" or "arise").
Now this, in my opinion, is to be contrasted with the words "accrue" and "arise" which are used in clauses (b) and (c).
Though there may be overlapping in some cases, I do not think the three are intended to mean the same thing.
The Privy Council thought in Commissioner of Income tax vs Mathias(1) that there is some variation in meaning between them and in Commissioner of Income tax vs Chunilal B. Mehta(2) they drew attention to the antithesis between "accruing and arising in" and "received in", though they also said in the earlier case that there is not a complete disjunction between them and that they are not three mutually exclusive qualifications (page 56); that is, that there may be some overlapping in certain cases.
Next, we turn to section 6 which divides the various sources of income under various heads for the purposes of computation and chargeability and states that each head shall be " chargeable" "in the manner hereinafter appearing".
It is to be observed that the word "shall" has been used and not " may " thereby implying that there is no option in the matter.
So far as business is concerned, the head is No. (iv) "Profits and gains of business etc.
" That carries us on to sections 10 and 13 which prescribe the method of computation.
Here again, the language is imperative and in the case of a business the method of computation has to be in accordance with the method of accounting regularly employed by the assessee: see Commissioner of Income tax vs Kameshwar Singh(3).
Now in the present case, the method of accounting was the mercantile system.
The essential difference (1) at 56.
(3) at 100 and 101.
(2) [1938] P I.T.R. 521 at 527, 125 966 between this and the cash basis system is that in the latter actual receipts and disbursements are taken into account.
In the former, sums which are due to the business are entered on the credit side immediately they are legally due and before they are actually received and expenditures are entered the moment a legal liability to pay arises and before the actual disbursements.
The profit or loss at the end of the accounting year is therefore based, not on a difference between what was actually received and what was actually paid out, but on the difference between the right to receive and the liability to pay.
I find it impossible in such a case to say that the taxation is on income, or profits and gains which were "received".
It can only be oil profits which " accrued " or "arose" to the assessee in the accounting year: see the Privy Council in Feroz Shah vs Commissioner of Income tax( ').
That, in my opinion, excludes section 4(l) (a) and that in turn means that in such a case a resident is taxed under section 4(l) (b) and a non resident under section 4(l) (c).
Now, this to my mind is of vital importance.
The primary object of the Income tax Act is to tax and not merely to ascertain an income.
The computation of the income is subsidiary and is only for the purposes of ascertaining the quantum of the tax: see Commissioner of Income tax vs Kameshwar Singh(2).
Therefore, if the legislature chooses to lay down different methods of computation and say that the taxation shall be on the amount so computed, it is essential that these methods be adhered to.
In some cases this may be to the advantage of the assessee and in others it may operate to his disadvantage.
But that is immaterial.
The importance lies in this.
All that can be taxed in a given year are the profits and gains which are received or which arise or accrue in the " previous year", and if the Act directs that the profits are to be computed in a given case on "accruals" or "arisals" and not on actual receipts it is essential that that be (1) 224 and 225.
(2) [1933] 1 I.T.R. 94 at 100.
967 done; and it follows from that that the tax in such a case can only be on the accruals or arisals and not on the actual receipts, for clearly you cannot tax on that which you are forbidden to compute in a case where the tax can only be levied on what is computable.
under the Act.
It is important to draw the distinction for this reason.
The rate of tax varies from year to year, therefore if the book profits which are directed to be taxed in a given year are, say, Rs. 10,000 and the actual receipts only Rs. 100, it makes a lot of difference which figure is taken; nor does it even itself out in the long run, for if the rate of taxation increases in the following year and the state of the business is just the reverse, namely that the book profits are only Rs. 100 whereas the actual receipts arising from the previous year 's transactions are Rs. 10,000, it will make a considerable difference to the assessee in the aggregate of tax payable over the years, whether he pays oil the basis of book profits or actual receipts in the two years.
I am not able to draw a distinction between a resident and a non resident in these matters.
I can find no ground for holding that in the case of a resident the mercantile system must be adopted for computing the profits if that is the system of accounting regularly employed but that that need not be done in the case of a non resident.
If the assessee had been a resident company, the taxation would, in my opinion, have been under section 4(l) (b) on profits and gains which had accrued or arisen and not under section 4 (1) (a) on profits which had been received.
The same principle must, in my opinion, be applied in the case of a nonresident and therefore section 4 (1) (c) is attracted, provided the profits and gains have actually accrued or arisen in the taxable territories or they can, because of section 42, be deemed to have accrued or arisen there.
If section 4 (1) (c) is not attracted, then the tax cannot be levied.
Now, applying section 4 (1) (c), the question is where do the profits and gains arise or accrue, in a case 968 like the present ? This is not free from difficulty and various views have been, and can be, taken.
But as these expressions have not been defined and as they are not words of art, I think they should be construed in their ordinary meaning which businessmen would ordinarily and easily understand in a business transaction.
When goods are sold it is to my mind evident that the profit or the loss on any particular transaction arises out of the sale, for until there is a sale there can be no profit.
The profit may not be wholly attributable to the sale but that is another matter.
It is to my mind unquestionable that they arise, in part, at any rate, out of the sale.
Therefore, if the goods are sold in the taxable territories, then, to my mind, the profits, or a portion of them, arise there.
As the Privy Council pointed out in Commissioner of Income tax vs Chunilal B. Mehta(1), in determining where the profits arise the place of the formation of the contract is not the sole criterion, other matters, as for example acts done under the contract are also material.
I am not here attempting to go behind the decision of the Supreme Court to the effect that the place of sale is not necessarily the place of the receipt of the profits.
I am construing the word "arise " and not "receive".
That brings me to the next question, where were the goods in the present ease sold ? That is a, mixed question of fact and law and must vary in each case and must, in my opinion, be answered in a commonsense way and not necessarily in the artificial manner laid down by the Sale of Goods Act to determine where and when the property passes.
What are the facts here ? In the case of the Rs. 4 lakhs odd, the control over the corpus of the goods was retained by the assessee right up to the moment the price was paid; and the price was paid not outside British India but to his nominees in this country, namely, to the assessee 's banks in British India.
These banks retained the documents of title and had the right to refuse (1) [1938]61.T.R.521 at533.
969 delivery until the money was actually handed over.
Therefore, the right to get possession of the goods and to take delivery accrued or arose in British India where the money was actually paid, and that to my mind must be taken to be the place where the profits accrued and arose for income tax purposes, not because the money was received there, for we are not concerned with actual receipts, but because the right which accrued at the date of the transaction was to receive the money in British India and hand over the goods there on the receipt of the money.
As I have said, the substance of the transaction must be viewed and that cannot be made to depend upon the method of book keeping.
Even if there are no books the profits on such a transaction would accrue in the place where the money is to be paid and the goods are to be handed over.
I cannot see how that can alter by reason of the method of accounting employed.
Accordingly, I agree that the method of accounting adopted by the assessee cannot affect the substance of the transactions between the parties or affect their nature.
The rights and liabilities of the parties inter se cannot be made to depend on the way in which one of them chooses to keep its books.
But that is not the case when we come to the question of taxation for income tax purposes.
There the method of accounting is vital.
But even there the substance of the transaction must be viewed, for the substance cannot alter by a mere method of accounting.
It is evident that if the assessee had been resident in British India and these transactions had been omitted from tile books, the sums which ought to have been entered would be taxable as items which had escaped assessment even if there had been no actual receipts in that or in any following year.
Therefore, it is not the entry in the books which attracts the taxation but the profits on the transaction itself, and when the mercantile system is used the profits arise when the right to receive them accrues and not when the entry is made.
If the system is properly employed the entry is made as soon as the right to receive the price arises and so for all practical 970 purposes that is the date ordinarily referred to, but a man cannot manipulate the amount of his tax by choosing to enter or not to enter items which ought to be entered on a particular date, as and when he pleases.
Now, the Rs. 4 lakhs odd represent actual receipts but that is not what is taxable when the computation is based on the mercantile system.
What should be taxed, or rather taken into account for the purposes of taxation, are the figures entered in the accounting year as the sale price of the various transactions which the Rs. 4 lakhs represent.
The profits which arise out of these transactions do not, on my view, escape tax because the profits accrue or arise in the taxable territories.
But the figure on which the tax is to be computed is not the 4 lakhs odd which represent the actual receipts but another figure which unfortunately we have not been given.
I am of course assuming that the figures were duly entered in the books at the proper time in accordance with the mercantile system of accounting.
If they were not, then the Income tax authorities have power to tax income which, for one reason or another, has escaped assessment Turning to the Rs. 12 lakhs.
We know that the figure entered in the books relating to these transactions was Rs. 13,41,744.
i am not clear whether that was entered in the accounting year with which we are concerned, though I gathered that that was the case.
The actual receipts, which followed later, amounted to only Rs. 12,68,480.
In my opinion, if anything is computable for the purposes of tax, it is the former figure (assuming all the entries are in the accounting year) and not the latter.
But in order to determine whether the profits on these transactions are taxable at all, we must examine the transactions.
In these cases the sales were to merchants resident in Ahmedabad.
But according to the assessee 's affidavit, " In respect of buyers from Ahmedabad, the apllicant Mills have no account of such buyers.
The 971 price is debited to the account of the said Jagmohandas Ramlal and company and credited to the sales account in the books of the applicant:" and later, Jagmohandas " discharges its debts by making payments to the applicants from time to time towards the balance in their said account in the books of the applicant Mills.
The said amounts are paid by the said firm by paying the same to the credit of the applicant Mills with British Indian banks or shroffs.
" Now, it is evident from this that Jagmohandas & Company do not merely guarantee payment by the Ahmedabad buyers but actually make the payments, or the equivalent of payments, to the assessee company.
So little do the 'buyers matter that their transactions are not even reflected in the accounts.
All we have is Jagmohandas.
It does not, in my opinion, matter whether the actual buyers remained primarily and legally responsible to the assessee or not.
The fact remains that in practice Jagmohandas & Company actually met the obligations of the buyers and discharged their liabilities to the assessee.
it is, equally clear that Jagmohandas & Company must have recouped themselves in some way from the buyers.
The question is how.
If the whole of the transactions occurred outside British India and the buyers or their agents went to Petlad and received the goods there and paid Jagmohandas & 'Company outside British India, then I am clear that the profits and gains did not accrue or arise in British India, simply be cause the (foods were ultimately brought there.
But if Jagmohandas & Company or their agents were paid in British India, the profits and gains, in my opinion, arose there in the same way as in the 4 lakhs case.
If Jagmohandas & Company were the actual agents of the assessee as were the banks in the other case, and the payments were made in the taxable territories, then the accrual and arising was direct.
If, however, they were not the agents in the strict sense of the term, then I am of opinion that section 42 would be attracted because at the very least there would be a "business connection", 972 provided of course the payments were made in the taxable territories.
Now, here again.
, I am looking to what was actually done in order to determine what the rights were, for it is evident that what was done was done in pursuance of some agreement, express or implied, between the parties which agreement regulated their rights, and those rights in turn determine the place where the profits accrued or arose, or must, because of section 42, be deemed to have accrued or arisen.
In my view, the question referred by the Incometax Appellate Tribunal in its statement of the case does not reflect the true position because it concentrates on the actual receipts.
If the cash basis system of accounting was germane here, then I would agree that the Rs. 4,40,878 was part of the assessee 's income in British India, and so also in the other case, provided the payments were made in British India.
But it is misleading to enquire what would have happened in circumstances which are not material in this case because of the mercantile system of accounting which was employed.
As regards the High Court.
The learned Judges refrained the question and answered it without sending the case back to the Income tax Appellate Tribunal for a further statement of the case.
That was not strictly proper.
But, in my opinion, the refrained questions suffer from the same defect.
In my opinion, the case should be sent back to the Income tax Appellate Tribunal for a refraining of the questions along the lines I have indicated and for a further statement of the case.
Appeal dismissed.
| A non resident company manufactured textile goods at P out side British India and sold the goods ex mills.
A firm, R & Co., guaranteed the sale price of goods sold ex mills by the company to purchasers at Ahmedabad within British India.
As the company maintained its accounts according to the mercantile system, the company debited R & Co., with the price of goods sold and credited the sales account with the amount of the bills.
R & Co., collected the amounts of the bills from the purchasers on behalf of the company and credited the sums realised in the company 's account with banks at Ahmedabad and also disbursed them to creditors of the company in British India.
These payments were credited by the company to R & Co. During the relevant accounting year the company thus received Rs. 12,68,480.
The company also received Rs. 4,40,878 from sales to purchasers in British India.
The amount of the sales bills for which hundis were drawn on the purchasers in favour of banks were debited by the company to the accounts of the respective merchants and credited to the sales account and the sums received by the banks from the purchasers against delivery of the railway receipts were credited by the company to the accounts of the respective purchasers.
In either case there was no change in the relationship of vendor and purchaser between the company and the purchasers by reason of the entries made in the company 's books.
The question as re framed by the High Court was whether these two sums were sale proceeds of the goods sold by the assesses to merchants in British India and whether they were received in British India and could be included in the assessable income of the company in British India: Held, per Mehr Chand Mahajan, section B. Das and Bhagwati J.J., (Vivian Bose J. dissenting) that the two amounts in question were sale proceeds of the goods sold and delivered by the company to merchants in British India ; that they were neither received by the company nor could be deemed to have been received by it when the entries were made in the books of account at P but had 951 merely accrued or arisen to it there; that they were first received by R & Co. and by the banks through whom the railway receipts were negotiated on behalf of the company in British India; and that they were therefore liable to tax under section 4(l) (a) of the Indian Income tax Act as having been received in British India on its behalf.
Though it is true that in the case of residents, if the assessee employs the mercantile system regularly it is obligatory on the income tax authorities to compute the income according to that system, it is doubtful whether that position would be available to a non resident who maintains his books of account outside British India according to the mercantile system.
Section 13 would only be relevant where the total profits of the assessee have to be computed and in that event the assessee would be entitled to claim that they should be computed according to the system of accounts maintained by him; it would not be relevant when stray items of income are sought to be assessed in the taxable territories as received in the taxable territories by a non resident.
Bose J.
In the case of accounts kept in the mercantile system, the profit or loss at the end of the accounting year is based not on a difference between what was actually received and what was actually paid out, but on the difference between the right to receive and the liability to pay.
The taxation in such cases is not on income, profits or gains which were received but on profits which "accrued or arose" to the assessee in the accounting year.
This view excludes section 4(l) (a) and this means that a resident is taxed in such cases under section 4(l)(b) and a non resident under section 4(l) (c).
Applying section 4(l) (c) to the present case, in the case of the Rs. 4 lakhs odd the profits accrued or arose in British India where the right to take delivery of the goods accrued and where the price was actually paid, but what is really taxable under section 4 (1) (c) is not the Rs. 4 lakhs odd, but the figures entered in the accounting year as the price of the various transactions which the Rs. 4 lakhs represented.
Similarly, in the case of Rs. 12 lakhs odd, it is the figure entered in the books in the accounting year relating to the transactions which is taxable.
By the Full Court.
The expression "deemed to be received" in section 4 (1) (a) means deemed by the provisions of the Act to be received.
Subramaniyan (Chettiar vs Commissioner of Income tax (2 I. T. C. 365), Ahmed Din Alladitta vs Commissioner of Income tax, Punjab , Kanwal Yayan Hanir Singh vs Commissioner of Income tax, Ajmer Merwara , Commissioner of Incometax vs Singari Bai (13 l.
T.R. 224) distinguished.
B.M. Kamdar, In re , Pondicherry Railway Co. vs Commissioner of Income tax (58 I.A. 239) and Commissioner of 952 Income tax vs Mathias (66 I.A. 23), Commissioner of Income tax vs Kameswar Singh , Commissioner of Income tax vs Chunilal Mehta referred to.
|
minal Appeal No . 67 of 1952.
Appeal by special leave from the Judgment and Order dated the 14th September, 1951, of the High Court of Judicature for the State of Punjab at Simla (Bhandari and Soni JJ.) in Criminal Appeal No. 361 of 1950, arising out of Judgment and Order dated the 13th May, 1960, of the Court of the Sessions Judge, Ferozepore, in Trial No. 28 of 1950 and Case No. 5 of 1950.
P. section Safeer for the appellant.
Gopal Singh for the respondent.
December 10.
The Judgment of the Court was delivered by MAHAJAN J.
Ajmer Singh, a young man of about 22 years of age was tried for the murder of Bagher Singh, his first cousin, and was acquitted by the Sessions Judge of Ferozepore by his judgment dated 13th May, 1950.
On appeal by the State Government, the order of acquittal was set aside by the High Court and the appellant was convicted under section 304, Indian Penal Code, and sentenced to ten years ' rigorous imprisonment.
This is an appeal by special leave against that decision.
One Nikka Singh had three sons, Bhagwan Singh, Lal Singh and Sunder Singh.
Bhagwan Singh died issueless some years ago and disputes arose between Lal Singh and his brother Sundar Singh in regard to the division of the property of Bhagwan Singh.
Sunder Singh was in possession of some of his landed 420 properties and Lal Singh obtained a number of decrees against him but Sunder Singh declined to restore possession of the properties to his brother Lal Singh.
In view of this litigation the relations between Lal Singh and Sunder Singh were considerably strained and it is said that for some time they were not even on speaking terms.
Lal Singh is married to Mst.
Dhan Kaur and from her he had two sons.
One of them Bagher Singh was murdered and the other, Arjan Singh, is P. W. 5.
Accused Ajmer Singh is the son of Sunder Singh and Banta Singh is his real brother.
Ajmer Singh is married to Jagir Kaur and Banta Singh to Kartar Kaur.
It is alleged by the prosecution that on the evening of the 27th January, 1948, Jagir Kaur complained to her fatherin law that her husband had pawned her ear rings in order to pay off his gambling debts.
On the morning of the 28th Banta Singh inquired from Ajmer Singh about this matter and he replied that he had pawned the ear rings to one Banta Singh Mazhbi.
Soon after this Ajmer Singh, Banta Singh and one Teja Singh went to Banta Singh Mazhbi and asked him to return the ear rings but the latter replied that no ornaments had been pawned with him and added that he would give a sum of Rs. 30 to them if Ajmer Singh took an oath that the ornaments had in fact been left with him.
It is said that Lal Singh was also present when this conversation took place and took up cudgels on behalf of Banta Singh Mazhbi and this led to an exchange of hot words between Lal Singh and the party of Sunder Singh 's two sons and their companion Teja Singh.
The parties, however, dispersed after exchanging hot words but without coming to blows.
At about sunset the same day Lal Singh and his brother Sunder Singh started abusing each other from their respective houses which open out into a common.courtyard.
This wordy warfare between the two brothers attracted the attention of Arjan Singh, Bagher Singh and one Ujagar Singh Mazhbi who on bearing the noise came to the house of Lal Singh.
421 Lal Singh finding himself supported by three others threw out a challenge to Sunder Singh and told him to come out in the open.
It is said that Sunder Singh, his two, sons Banta Singh and Ajmer Singh, and Teja Singh, a cousin of theirs, accepted the challenge and rushed out of the house.
Teja Singh and Banta Singh were armed with spears and they made an attack on Lal Singh and Dhan Kaur and inflicted on their persons a number of injuries.
Ajmer Singh, it is said, was armed with a spear and he plunged his weapon into the chest of Bagher Singh who collapsed and died almost instantaneously.
Arjan Singh soon after reported this incident at the police station after travelling a distance of about seven miles at 11 45 p. m.
He gave to the police substantially the same version as has now been deposed to by him in the witness box.
In this report it was stated by Arjan Singh that it was Ajmer Singh who dealt Bagher Singh a barchha blow on his chest and that Bagher Singh fell down at this blow.
The police arrested Sunder Singh, Teja Singh and Banta Singh but the appellant could not be found.
Sunder Singh, Teja Singh and Banta Singh were prosecuted under section 302/34 but were convicted under section 324, Indian Penal Code, Banta Singh and Teja Singh were sentenced to two years ' rigorous imprisonment each and Sunder Singh to six months ' rigorous imprisonment.
On appeal, Sunder Singh was acquitted and the sentences imposed on Banta Singh and Teja Singh were reduced.
A lenient view ' of the affair seems to have been taken because the fight between these near collaterals took place suddenly and ended promptly.
Bagher Singh died as a result of one blow and injuries on the person of Lal Singh and Dhan Kaur were not very serious Ajmer Singh was apprehended on 4th December, 1948, and as above stated, was tried by the learned Sessions Judge of Ferozepore and acquitted, but was convicted by the High Court on appeal by the State Government.
422 Lal Singh, P. W. 3, father of the deceased, Dhan Kuar, his mother, and Arjan Singh,his real brother, have given direct evidence about the occurrence.
Ujagar Singh Mazhbi whose name is mentioned in the first information report was tendered for cross examination but no question was put to him about the actual fight, and the manner in which it took place or the part that was taken in it by the accused.
One Bishandas, whose shop adjoins the shop of Banta Singh Mazhbi, was tendered for cross examination as P.W.7.
He deposed that Banta Singh Mazhbi and Lal Singh were the only persons when the quarrel about ear rings took place near his shop.
In reexamination he stated that Banta Singh, brother of the accused, and Teja Singh had come on one side and Lal Singh on the other when the quarrel about the ear rings took place.
No direct question was put to the witness about the presence of, Ajmer Singh on that occasion.
The learned Sessions Judge considered him a wholly independent witness and accepted his evidence about the incident that took place at Banta Singh Mazhbi 's shop on the morning of the 28th.
He held that Ajmer Singh was not present at Banta Singh Mazhbi 's shop and that Lal Singh and Arjan Singh had falsely implicated him in the quarrel over the ear rings, and that if the witnesses could falsely involve him in regard to one part of the occurrence, the possibility of his being implicated for the murder of Bagher Singh merely as a matter of vindictiveness could not be outruled.
After examining the evidence of the three eye witnesses in detail, the learned Sessions Judge reached the conclusion that they had suppressed the facts in order to absolve themselves of all liability for the happenings of the 28th, and had uttered untruths and that no confidence could be reposed in their statements about the part that they had assigned to Ajmer Singh.
In the concluding part of the judgment he observed that " the parties were at logger heads on several issues and in the absence of independent evidence it is difficult to place reliance on the prosecution story 423 in regard to Ajmer Singh.
" The High Court on appeal minutely reviewed the evidence of these three eye witnesses and considered that the variations in the statements of witnesses made at , the two trials and which had weighed on the mind of the Sessions Judge were of a minor and trifling character and were quite natural as the Statements at this trial had been made 27 months after the occurrence and that the narration of events by Arjan Singh was substantially the same as had been given by him at the earlier trial and in the first information report.
As regards Lal Singh, who had resiled from his earlier statement and bad denied that he was armed with a phaura or that Arjan Singh wag armed with a lathi, it was said that this omission on his part was due to mere lapse of memory and forgetfulness rather than to a deliberate design to improve upon the prosecution story.
It was argued by Mr. Pritam Singh Safeer that in this case there were no compelling reasons for setting aside the order of acquittal and that due proper weight had not been given by the High Court to the opinion of the trial judge as regards the credibility of witnesses seen and examined by him.
The learned counsel submitted that the High Court was in error in the view that "when a strong prima facie case is made out against an accused person it is his duty to explain the circumstances appearing in evidence against him and` he cannot take shelter behind ' the presumption of innocence and cannot state that the law entitles him to keep his lips sealed.
" We think this criticism is well founded.
After an order of acquittal has been made the presumption of inno cence is further reinforced by that order, and that being so, the trial court 's decision can be reversed not on the ground that the accused had failed to explain the circumstances appearing against him but only for ,very substantial and compelling reasons.
As the courts below expressed divergent opinions on the credibility of the prosecution witnesses, we 35 424 had to read the evidence adduced in the case with great care and after doing so, we are on the whole inclined to agree with the view expressed by the High Court.
It is difficult to believe that without there being any truth in the fact that the appellant struck Bagher Singh with a barchha, Arjan Singh selected the appellant and ascribed to him that part soon after the occurrence.
There are no material discrepancies in the statements made by Arjan Singh on different occasions and in our view the reasons given by the learned Sessions Judge for rejecting his testimony are not convincing.
We agree with the High Court that there are no sufficient reasons for distrusting his evidence.
The number of persons who took part in the quarrel was not more than seven or eight and the blows inflicted were few, and in these circumstances Arjan Singh could have made no mistake as to the identity of the person who struck Bagher Singh fatally.
This part of his statement is corroborated by the evidence of Lal Singh and Dhan Kaur.
No cross examination was directed, against this part of their statements.
It seems that the learned Sessions Judge took too exaggerated a view of the minor discrepancies in these statements and read them with a rather hypercritical mind.
Bishandas, whose statement considerably impressed him, was only tendered for cross examination and never made a full statement about the happenings of the 28th morning.
The statement made by him is somewhat cryptic and from this it cannot be definitely concluded that Ajmer Singh was not present on the morning of the 28th at the shop of Banta Singh Mazhbi.
The learned Sessions Judge was not right in rejecting the whole of the prosecution evidence as unreliable merely on the basis of this cryptic statement.
Ujagar Singh, the other so called independent witness, was tendered for cross examination but the defence did not ask him a single question about the happenings of the 28th.
The argument therefore that the prosecution withheld from court independent witnesses who had witnessed the occurrence is without any substance.
The learned Sessions Judge 425 was apparently labouring under some misapprehension when he said that the prosecution had withheld from the court independent witnesses of the occurrence.
Apart from Ujagar Singh Mazhbi, no one else appears to have been present when the attack was made on Bagher Singh, Lal Singh and Mst.
Dhan Kaur by the party of the accused.
All that appears in evidence is that after the fight was over a number of persons arrived on the scene but as they did not witness the attack on Bagher Singh they could give no evidence on this point and their non production as witnesses cannot have any consequence on the case.
It is significant that the defence also led no evidence to prove that the fight took place in a manner different from the one described by the prosecution witnesses, or that Ajmer Singh was not present on the occasion.
In an appeal under section 417 of the Code of Criminal Procedure the High Court had full power to review the evidence upon which the order of acquittal was founded and we are satisfied that it did not in any way exercise it wrongly The injuries on the person of Kartar Kaur and under Singh were not proved to have been inflicted at the time of the occurrence and were of no consequence.
The prosecution was under no obligation to explain how they came about.
It was next argued that the trial held by the Sessions Judge was vitiated as the examination of the appellant was not in accordance with the provisions of section 342, Criminal Procedure Code.
There is considerable force in the point that the examination of the appellant by the Sessions Judge was detective.
All that the Sessions Judge did was, that he read out the examination of the accused in the committal court to him and then recorded the following questions and answers: " Q: Did you make before the Committing Magistrate the statement that has just now been read out to you ? A: Yes.
426 Q:Now that you have heard the entire evidence against yourself and the charge has been explained to you, do you wish to say anything else ? A: I am innocent.
Q: Do you wish to produce any evidence indefence ? A: No." In the committal court the 'questions put to the accused and his answers were these : " Q: Did you pawn the, ear ring of your wife with Banta Mazhbi and squander the proceeds on or about 28th January, 1948 ? A: No. Q : Did Lal Singh interfere when you were demanding the ear rings from said Banta Singh on 28th January, 1948, at Nathuwala and remark that the sweeper, i.e., Banta, was speaking truth when he denied the transaction ? A: No. Q: Did you on 28th January , 1948, at Nathuwala along with your father Sunder Singh, Banta Singh, and Teja Singh, you Banta Singh and Teja Singh being armed with spears, attack Lal Singh, his 'son Bagher Singh and Dhan Kaur at their house and in furtherance of the common intention of you all, Banta and Teja caused simple injuries to Lal Singh with spears and you caused fatal injuries with a spear to Bagher Singh deceased? A No. Q Why this case against you ? A Due to enmity.
Q Anything else to say? A No." The Sessions Judge did not even take care to ask the accused the routine question whether the statement made by him in the committal court was correct.
As if bard pressed for time, be simply asked him whether he had made that statement read out to him in the committal court, and was satisfied with an 427 answer, in the affirmative.
The, second question asked, is of a general character and. ' does not satisfy the requirements of section 342, Criminal Procedure Code.
We are of the opinion that when the Sessions Judge is required by that section to make the examination of the .accused, his duty is not discharged by merely reading over the questions and answers to the accused put in the committing magistrates court and by asking him whether he has to say anything about them.
It is not, sufficient compliance with the section to generally ask the accused that having heard the prosecution evidence, what he has to say about it.
The accused must be, questioned separately about each material circumstance which is intended to be used against him.
It was pointed out by this Court in Tara Singh vs The State(1) that the whole object of the section, is to afford the accused a fair and proper opportunity of explaining circumstances which appear against him and that the questions must be fair and must be couched in a form which an ignorant or illiterate person will be able to appreciate and understand.
In this particular case at one stage of the argument we were inclined to order a retrial of the accused in view of the defective examination of the accused by the Sessions Judge but on further thought we have reached the conclusion that the 'High Court was right in the view that the defective procedure followed by the Sessions Judge in this respect has not occasioned any prejudice to the accused.
The facts of the case are free from any complication and the point in issue was a simple one and it cannot be said that the per functory examination of the appellant did any damage.
The only point appearing in the evidence against the accused was that he gave a barchha blow to Bagher Singh.
The witnesses had stated that fact in his face and had been cross examined on the point by his counsel.
He was fully apprised of the part ascribed to him in the quarrel.
His answer to this specific question in the committal court was that he was innocent and that he was being implicated owing to (1) ; 428 enmity.
He stuck to that reply in the Court of Session after fully understanding what he was asked.
It is well settled that every error or omission not in compliance with the provisions of section 342 does not necessarily vitiate a trial.
Errors of this type fall within the category of curable irregularities, and, as held in Tara Singh 's case(1), the question, whether the trial is vitiated, in each case depends upon the degree of the error and upon whether prejudice has been or is likely to have been caused to the accused.
We are of the opinion that the disregard of the provisions of section 342 in this case is not so gross as would justify our quashing the conviction and ordering a retrial.
The result is that we uphold the judgment of the High Court and dismiss the appeal.
Appeal dismissed.
| After an order of acquittal has been made the presumption of innocence is further reinforced by that order, and that being so, the trial court 's decision cannot be reversed merely on the ground that the accused had failed to explain the circumstances appearing against him but only for very substantial and compelling reasons.
In an appeal under section 487, Criminal Procedure Code, the High Court has full power to review the evidence upon which the order of acquittal was founded.
The duty of a Sessions Judge under section 342, Criminal Pro cedure Code, to examine the accused is not discharged by merely reading over the questions put to the accused in the Magistrate 's Court and his answers, and by asking him whether he has to say anything about them.
It is also not a sufficient compliance with the section to generally ask the accused t hat, having heard the prosecution evidence what he has to say about it.
He must be questioned separately about each material circumstance which is intended to be used against him.
The, whole object of the section 419 is to afford the accused a fair and proper opportunity of explaining circumstances which appear against him and the questions must be fair and must be couched in a form which an ignorant or illiterate person may be able to appreciate and understand.
It is, however, well settled that every error or omission complying with section 342 does not necessarily vitiate the trial.
Errors of this type fall within the category of curable irregularities and the question whether the trial has been vitiated depends in each case upon the degree of error and upon whether prejudice has been or is likely to have been caused to the accused.
Tara Singh vs The State ([1951] S.C.,R. 729) referred to.
|
iminal Appeal No. 79 of 1952.
Appeal by special leave from & Judgment and Order dated 16th April, 1951, of the High Court of Judicature at Allahabad Dayal and Desai JJ.) in Criminal Miscellaneous No. 17 of 1950.
K. section Krishnaswami Iyengar (H. B. Asthana, with him) for the appellants.
N. C. Sen for the respondent.
February 5.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal by special leave from the judgment and order dated the 16th April, 1951 of the Allahabad High Court in Criminal Miscellaneous Petition No. 17 of 1950.
The two appellants are members of the Uttar Pradesh Civil Service.
583 In March, 1950, appellant No. 1 (Rizwan ul Hasan) was posted as District Magistrate, Jalaun, and appellant No. 2, Mohammad Munawar, was posted as a Magistrate in the same district, having officiated as District Magistrate for some time in the early part of March, 1960.
On 2nd March, 1,950, one Phundi Singh commenced proceedings under section 145 of the Code of Criminal Procedure in the Court of the Sub Divisional Magistrate of Jalaun on the allegation that Kedarnath and Matadin were about to cut his standing crop by force and 'that there was an imminent danger of a breach of the peace.
The magistrate issued notices to the parties complained against and ordered attachment of the standing crop.
On 4th March, 1950, one Shriram, brother of Kedarnath, filed a counter application before the court making certain allegations against one Thakur Pratap Singh, said to be the real person behind the proceedings commenced by Phundi Singh.
Kedarnath and Matadin, the respondents in Phundi Singh 's application, also filed an application similar to that of Shriram before the District Magistrate on the same date.
This application was accompanied by a recommendatory letter written to the District Magistrate by Lalla Ram Dwivedi, Secretary, District Congress Committee.
It was received by the second appellant who was then officiating as District Magistrate and was sent by him to the Sub Divisional Magistrate, Jalaun, in whose court Phundi Singh 's application was pending, for report.
The Sub Divisional Magistrate returned it with the remark that a proper com plaint should be made in his court in the ordinary way on the allegations made in the application.
Thereupon the second appellant returned the application to Kedarnath and Matadin and advised them to move the Sub Divisional Magistrate in as formal and proper manner.
On the application of Phundi Singh made before the High Court of Allahabad under section 3 of the 584 Contempt of Courts Act, the second appellant was held guilty of contempt of the Sub Divisional Magistrate on the following reasoning Shri Mohammad Munawar opposite party No. 5 forwarded application given by the opposite parties Nos ' 2 and 3 together with introductory letter to the Sub Divisional Magistrate,Jalaun.
We do not think that he had any intention to influence the Sub Divisional Magistrate with respect to his action in the case under section 145, Criminal Procedure Code.
But intention is not 'of importance so far as the question of commission of contempt is concerned.
He certainly acted without due circumspection and thought.
It must have been clear to him that the application contained expression which affected the due considerations of the points in dispute in the proceeding under section 145, Criminal Procedure Code.
He says in his affidavit and we can accept it that he sent this application to the Sub Divisional Magistrate just for taking action for the protection of opposite parties No. 2 and No. 3 and their crop about which an allegation was made that some action was to be taken by the other party the night following.
He should in the circumstances either pass an order for the police himself which he could have very well done, or he could have just conveyed a gist of the complaint necessitating protection of life and property immediately.
His conduct in transmitting the allegations made by the opposite parties No. 2 and 3 to the Sub Divisional Magistrate, Jalaun, in whose court the case under section 145, Criminal Procedure Code, was pending, did amount to the commission of contempt of that court." As regards the first appellant, the facts are that on 22nd March an application was received by post in the office of the District Magistrate signed by Shriram containing allegations against the trying Magistrate.
On 25th March, 1950, this application was sent by the appellant for report to the Sub Divisional Magistrate with the following endorsement 585 section D.C.
Please look into these allegations and let me have a report.
" On 4th April, 1950, the Sub Divisional Magistrate submitted a report and the first appellant having been satisfied that the allegations were baseless passed the following order: " I do not see any reason to withdraw the case from your file." On the application of Phundi Singh mentioned above made before the High Court of Allahabad under section 3 of the Contempt of Courts Act this appellant along with others was also held guilty of contempt of the Sub Divisional Magistrate 's Court, on the following reasoning : "Similarly transmission of the application sent by Shriram on the 25th March to the Sub Divisional Magistrate, Jalaun, amounted to commission of contempt of court by opposite party No. 6.
The mere fact that he had to take action in view of the allegations against the magistrate in that application would not affect this question.
The application contained, as already stated, expressions showing that Phundi Singh was a history sheeter and that the case under section 145, Criminal Procedure Code, was fictitious and was instituted at the instance of Pratap Singh.
He should not have transmitted the entire application.
He could have necessary extracts which related to the allegations against the magistrate sent to the ' court concerned in the circumstances when the applicants introduced matter irrelevant for transfer application.
It may also be mentioned here that the application could be treated as a transfer application though no such request was made in that application.
The application was neither properly presented nor was it accompanied by an affidavit nor was it stamped.
The applicant wanted some action for the protection of his crop from bad characters." Having found both the appellants guilty of contempt of court of the Sub Divisional Magistrate, Jalaun, the High Court took no action against them because they happened to commit contempt of court rather due to their carelessness Find lack of vigilance 586 than with any deliberate intention to commit it.
It was observed that officers who have to transmit communications to courts of justice should be vigilant and careful to see that nothing is transmitted which can have any effect, even remotely on, the merits of a case.
In our judgment, the proceedings for contempt of court against the two appellants on the facts stated are misconceived and have to be quashed.
Both the appellants were superior officers of the Sub Divisional Magistrate at the time when they sent the applications of Kedarnath and Matadin for report.
They were under a duty to supervise his work.
It is difficult to see how by transmitting the applications received by them to him, and asking him for his views they were in any way interfering with the course of justice and were committing contempt of his court.
Their action cannot be characterized as having a tendency to interfere with the course of justice.
The applications were transmitted to the Sub Divisional Magistrate in the usual and normal course of the official practice and we 'cannot subscribe to the view of the High Court that only extracts of these applications should have been sent to him for his views and not the applications as such as they contained material which had a tendency to interfere with the course of justice.
The second appellant, when he was officiating as District Magistrate, received the application of Kedarnath and Matadin with a letter of recommendation from the Secretary of the Congress Committee.
This application was in the nature of a counter complaint, and the appellant acted properly in sending it to the magistrate who was seised of the original application.
He was under no duty to censor it and to out it into pieces and then forward the relevant parts only to the magistrate.
The recommendatory letter was an annexure to the application and it had to go with it.
The conduct of the Secretary of the Congress Committee in writing a recommendatory letter about the facts of the case to the District 587 Magistrate was undoubtedly a communication for the purpose of influencing his decision and was rightly reprobated by the High Court.
Such 9, course is calculated, if tolerated, to divert the course of justice and ought more frequently than it is, to be treated as what it really is ' namely, a high contempt of court.
The Congress Secretary has been rightly held guilty of contempt and punished.
He has not come to this Court and we are no longer concerned with him.
But we are unable to find how the conduct of the appellant in sending the application which, as we have already stated, was in the nature of counter charge to the Sub Divisional Magistrate who was seised of the original complaint in any way amounted to contempt of court.
There are three different sorts of contempts known to law in such matters.
One kind of contempt is scandalizing the court itself.
There may likewise be a contempt of the court in abusing parties who are concerned in causes in that court.
There may also be a contempt of court in prejudicing mankind against persons before the cause is heard.
The act of the appellant could not fall in either of these three categories.
So far as the first appellant is concerned, under the provisions of section 528 of the Code of Criminal Procedure, he had authority to withdraw the case under section 145 of the Code pending in the court of the Sub Divisional Magistrate.
On the application of 22nd March made by Kedarnath and Matadin containing allegations against the Sub Divisional Magistrate he was entitled to use his powers under that section if the allegations contained therein were substantiated.
It is usual to send such applications to the court concerned for its remarks and that is precisely what he did.
and as soon as the remarks were received and he was satisfied that the allegations were baseless, he declined to withdraw the case.
We have not been able to see how such an action on the part of the District Magistrate, done in the normal and usual course of the discharge of his duties as such magistrate, could be held to interfere with the 76 588 course of administration of justice or to create pre re judice of any kind against the complainant in the proceedings under section 145 of the Code of Criminal Procedure.
There is nothing in section 528 of the Criminal Procedure Code which disables a magistrate from taking action unless he is set in motion by the petition of one of the parties and nothing in the Code prevents any person from bringing facts to the notice of the District Magistrate which might suggest to that magistrate that it was advisable to see whether the magistrate should remain in charge of a particular case.
In our judgment, therefore, the High Court was in error in thinking that the two appellants acted without due circumspection and thought and were guilty of contempt of the court of the Sub Divisional Magistrate.
We are further of the opinion that it was not possible to hold on those facts that any prejudice &rose in the case by these two applications being sent by the appellants to the Sub Divisional Magistrate or that any action was necessary for the protection of the tribunal which was engaged in hearing the case under section 145, Criminal Procedure Code.
As observed by Rankin C.J. in Anantalal Singha vs Alfred Henry Watson (1), the jurisdiction in contempt is not to be invoked unless there is real prejudice which can be regarded as a, substantial interference with the due course of justice and that the purpose of the court 's action is a practical purpose and it is reasonably clear on the authorities that the court will not exercise its juris diction upon a mere question of propriety.
The result is that we allow the appeal, set aside the judgment of the High Court against the two appellants and acquit them of the charge under section 3 of the Contempt of Courts Act.
Appeal allowed.
Agent for the appellant : section Subramanian.
| The jurisdiction in contempt of court is not to be invoke a unless there is real prejudice which can be regarded as a substantial interference with the due course of justice.
The purport of the court 's action is a practical purpose and the Court will not exercise its jurisdiction upon a mere question of propriety.
During the pendency of proceedings against A and B under section 145, Criminal Procedure Code, in the court of a Sub Divisional Magistrate, A and B made an application to the District Magistrate alleging that the proceedings were not bona fide and 582 containing statements in the nature of a countercharge.
The 2nd appellant who was then officiating as the District Magistrate sent this application to the Sub Divisional Magistrate for report and on receiving a report from him that A and B should be asked to file a formal complaint before him, advised them to do so.
A brother of A sent a similar petition to the District Magistrate containing also allegations against the trying Magistrate.
The 1st appellant, who was the District Magistrate, forwarded them to the Sub Divisional Magistrate for report, and on receiving his report passed an order that he saw no reason to withdraw the file from the Sub Divisional Magistrate.
The High Court of Allahabad held that as the applications contained allegations which might interfere with the course of the trial of the proceedings under section 145, in transmitting the applications the appellants had acted without due circumspection and thought though they had no intention to influence the Sub Divisional Magistrate and the appellants were therefore guilty of contempt of court: Held, (i) that in transmitting the applications received by them to the Sub Divisional Magistrate and calling for a report the appellants were not in any way interfering with the course of justice but were only doing their duty as superior officers; (ii) it was not possible to hold that any prejudice had been caused by the two applications being sent by the appellants to the Sub,Divisional Magistrate or that any action was necessary to protect the Sub Divisional Magistrate who was hearing the case and the appellants were not guilty of any contempt of court.
Anantalal Singha vs Alfred Henry Watson ([1931] I.L.R. referred to.
|
Civil Appeal No. 59 of 1952.
Appeal from the Judgment and Order dated 3rd January, 1952, of the High Court of Judicature at Patna (Ramaswami and Sarjoo Prosad JJ).
in an application under article 226 of the Constitution registered as Miscellaneous Judicial Case No. 204 of 1950.
Original Petition No. 20 of 1952 under article 32 of the Constitution was also heard along with this appea.
P. R. Das (B. Sen, with him) for the appellants.
M. C. Setalvad, Attorney General for India, and Mahabir Prasad, Advocate General of Bihar (G. N. Joshi, with them) for the respondents.
February 20.
The court delivered judgment as follows : PATANJALI SASTRI C. J. I concur in the judgment which my learned brother Mukherjea is about to deliver, but I wish to add a few words in view of the important constitutional issue involved.
The facts are simple.
The appellants obtained a settlement of about 200 bikhas of land in a village known as Sathi Farm in Bettiah Estate, in Bihar, 1131 then and ever since in the management of the Court of Wards on behalf of the disqualified proprietress who is the second respondent in this appeal.
The lands were settled at the prevailing rate of rent but the salami or premium payable was fixed at half the usual rate as a concession to the appellants who are said to be distant relations of the proprietress.
The appellants paid the salami and entered into possession of the lands on the 2nd November, 1946, and ' have since been paying the rents regularly.
On the 13th June, 1950, the Bihar Legislature passed an Act called the Sathi Lands (Restoration) Act, 1950.
The genesis of this legislation is thus explained in the counter affidavit filed on behalf of the State of Bihar, the first respondent herein.
Report against the settlement of these lands with the petitioners as well as some other lands to Sri Prajapati Mishra and the unlawful manner in which these settlements were brought about, was carried to the Working Committee of the Indian National Congress, which body, after making such enquiry as it thought fit, came to the conclusion that the settlement of these lands with the petitioners was contrary to the provisions of law and public policy and recommended that steps should be to taken by the State of Bihar to have these lands restored to the Bettiah Estate.
In pursuance thereof a request was made to the petitioners and to the said Prajapati Mishra to return the lands to Bettiah Estate.
While Sri Prajapati Mishra returned the land settled with him, the petitioners refused to do so.
The Statement of Objects and Reasons of the Sathi Lands (Restoration) Bill runs thus: "As it has been held that the settlement of Sathi lands in the District of Champaran under the Court of Wards with Sri Ram Prasad Narayan Sahi and Shri Ram Rekha Prasad Narayan Sahi is contrary to the provisions of the law and as Sri Ram Prasad Narayan Sahi and Sri Ram Rekha Narayan Sahi have refused to return the lands to the Bettiah Estate, Government 1132 have decided to enact a law to restore these lands to the Bettiah Estate." The impugned Act consists of three sections.
Section 2(1) declares that "notwithstanding anything contained in any law for the time being in force" ', the settlement obtained by the appellants is "null and void", and that "no party to the settlement or his successor in interest shall be deemed to have acquired any right or incurred any liability thereunder".
Sub section (2) provides that the appellants and their successors in interest "shall quit possession of the said land from the date of commencement of this Act and if they fail to do so, the Collector of Champaran shall eject them and restore the lands to the possession of the Bettiah Wards Estate".
Subsection (3) provides for the refund of the amount of salami money and the cost of improvement, if any, to the lessees by the estate on restoration to it of the lands in question.
In the "case" lodged in this court for the State of Bihar, the legislation is sought to be justified and its validity maintained on the following grounds: " It is well settled that a Legislature with plenary powers so long as it enacts law, within the ambit of its powers, is competent to enact a law which may be applicable generally to society or to an individual or a class of individuals only .
It is submitted that grants of the lands belonging to the Bettiah Estate made by the Court of Wards were of doubtful validity; hence they have been dealt with by the impugned Act .
No evidence has been adduced by the appellants, except a bare allegation, which has not been substantiated, that about 2000 acres of land were settled to show that persons in similar circumstances with whom similar settlements were made, were treated differently.
It is submitted that in the context the impugned Act, has a reasonable basis of classification.
" The decision of the majority of this Court in Chiran vs The Union of India(1) is relied on in suport of these contentions, In that case, however, the (1) ; , 1133 majority felt justified in upholding the legislation, though it adversely affected the rights and interest of the shareholders of a particular joint stock company, because the mismanagement of the company 's affairs prejudicially affected the production of an essential commodity and caused serious unemployment amongst a section of the community.
Mr. Justice Das and I took the 'view that legislation directed against a particular named person or corporation was obviously discriminatory and could not constitutionally be justified even if such legislation resulted in some benefit to the public.
In a system of government by political parties, I was apprehensive of the danger inherent in special enactments which deprive particular named persons of their liberty or property because the Legislature thinks them guilty of misconduct, and I said in my dissenting opinion: "Legislation based upon mismanagement or other misconduct as the differentia and made applicable to a specified individual or corporate body is not far removed from the notorious parliamentary procedure formerly employed in Britain of punishing individual delinquents by passing bills of attainder, and should not, I think receive judicial encouragement.
" My apprehensions have come true.
Recently we had before us a case from Hyderabad (Civil Appeal ,No. 63 of 1952Ameerunnissa Begum vs Mahboob Begum) ' where the duly constituted legislative authority of that State intervened in a succession dispute between two sets of rival claimants to the estate of a deceased person and " dismissed " the claim of the one and adjudged the Property to the other by making a special " law " to that effect.
And now comes this case from Bihar of an essentially similar type.
The appellants assert title to certain lands in Bettiah Estate under a settlement which they claim to have lawfully obtained from the Court of Wards, while it is now alleged on behalf of the Estate that the settlement was not for the benefit of the Estate and was contrary to law, as the Court of Wards did not then " apply its (1) Since reported as ; 147 1134 mind " to that question.
This is purely a dispute between private parties and a matter for determination by duly constituted courts to which is entrusted, in every free and civilised society, the important function of adjudicating on disputed legal rights, after observing the well established procedural safeguards which include the right to be heard, the right to produce witnesses and so forth.
This is the protection which the law guarantees equally to all persons, and our Constitution prohibits by article 14 every State from denying such protection to anyone.
The appellants before us have been denied this protection.
A political Organization of the party in power decides after making such enquiry as it thought fit, that the settlement in question was " contrary to the provisions of law and public policy " and the State Legislature, basing itself on such decision, purports to declare the settlement " null and void " and directs the eviction of the appellants and the restoration of the lands to the Estate.
The reasons given for this extraordinary procedure are indeed remarkable for their disturbing implications.
It is said that "there was agitation amongst the tenants of the locality and opposition on the part of persons living in the locality against the appellants ' possession of the lands which led to breach of the peace and institution of criminal cases ".
Whenever, then, a section of the people in a locality, in 'assertion of an adverse claim, disturb a person in the quiet enjoyment of his property, the Bihar Government would seem to think that it is not necessary for the police to step in to protect him in his enjoyment until he is evicted in due course of law, but the Legislature could intervene by making a " law " to oust the person from his possession.
Legislation such as we have now before us is calculated to drain the vitality from the rule of law which our Constitution so unmistakably proclaims, and it is to be hoped that the democratic process in this country will not function along these lines.
MUKHERJEA J.
This appeal, which has come before us on a certificate granted by the High Court of 1135 Patna under article 132 (1) of the Constitution, is directed against a judgment of a Division Bench of that court, dated 3rd January, 1952, by which the learned Judges dismissed a petition of the appellants under article 226 of the Constitution.
The prayer in the petition was for a writ in the nature of mandamus, directing the opposite party, not to take any action, under an Act passed by the Bihar Legislative Assembly in 1950 and known as The Sathi Lands (Restoration) Act which was challenged as void and unconstitutional.
To appreciate the points in controversy between the parties to the proceeding, it may be necessary to narrate the material facts briefly.
Maharani Janki Koer, the respondent No. 2 in the appeal, is the present proprietress of an extensive Estate in Bihar known by the name of Bettiah Raj, which is held and managed on her behalf by the Court of Wards, Bihar, constituted under Bengal Act IX of 1879.
On 19th July, 1946, the appellants, who are two brothers and are distantly related to the Maharani, made a representation to the Government of Bihar through the Manager of the Estate, praying for settlement in raiyati right, of 200 bighas of land preferably in Sathi farm or Materia farm along with a certain quantity of waste lands.
On 20th July, 1946, the then Manager of the Wards Estate wrote a letter to the Collector of Champaran recommending that the applicants might be given settlement of the lands as prayed for, without payment of any selami.
The Collector, however, did not.
agree to this proposal, nor did the Commissioner of the Tirhut Division, and the matter then came up for consideration before the Board of Revenue which recommended that settlement might be made with the applicants provided they were agreeable to pay selami at half the usual rates.
On 14th October, 1946, the recommendation of the Revenue Board was accepted by the Provincial Government and six days later the Court of Wards accepted a cheque for Rs. 5,000 from one of the lessees, towards payment of the selami money and rent for the year 1354 F.S.
On the 2nd November, 1946, possession 1136 of the lands was given to the appellants and on the 18th of November following, the Manager of the Court of Wards recorded a formal order fixing the selami of the land at Rs. 3,988 annas odd and rent at Rs. 797 annas odd per year.
On the same day, a Hisab Bandobasti form, which is the usual form employed in the Estate for raiyati settlements, was signed by the Circle Officer on behalf of the Court of Wards and by one of the lessees for himself as well as the constituted attorney of the other lessees.
It is not disputed that the lessees continued to possess the lands since then on payment of the stipulated rent.
On the 3rd June, 1950, the Bihar Legislative Assembly passed an Act known as The Sathi Lands (Restoration) Act which received the assent of the Governor on the 13th June, 1950.
The object of the Act, as stated in the preamble, is to provide for restoration of certain lands belonging to the Bettiah Wards Estate which were settled contrary to the provisions of law in favour of certain individuals.
Section 2, which is the only material section in the Act, enacts in the first sub section that the settlement of Sathi lands (described in the schedule to the Act) on behalf of the Bettiah Court of Wards Estate with the appellants, as per order of the Manager of the Estate dated the 18th November, 1946, is declared null and void and no party to the settlement ,or his successor in interest shall be deemed to have acquired any right or incur any liability under the same.
The second sub section embodies a direction to the effect that the said lessees and their successor in interest shall quit possession of the lands from the date of the commencement of the Act and if they fail to do so, the Collector of Champaran shall eject them and restore the lands to the possession of the Bettiah Estate.
The third and the last sub section provides that the Bettiah Wards Estate shall on restoration to it of the lands pay to the lessees the selami money paid by them and also such amount as might have been spent by them in making improvements on the lands prior to the commencement of the Act.
1137 In substance, therefore, the Act declared the lease granted by the Bettiah Wards Estate to the appellants on the 18th November, 1946, to be illegal and inoperative and prescribed the mode in which this declaration was to be given effect to and the lessees evicted from the lands.
On the 28th August, 1950, the appellants filed the petition, out of which this appeal arises, under article 226 of the Constitution in the High Court of Patna, challenging the validity of The Sathi Lands Act and praying for a writ upon the respondents restraining them from taking any steps under the said Act, or from interfering with the possession of the appellants in respect of the lands comprised in the lease.
It was asserted by the petitioners that in passing the impugned legislation the Bihar Legislature actually usurped the power of the judiciary and the enactment was not a law at all in the proper sense of the expression.
The other material contentions raised were that the legislation was void as it conflicted with the fundamental rights of the petitioners guaranteed under articles 14, 19(1) (f) and 31 of the Constitution.
The respondents opposite parties in resisting the petitioners ' prayer stated inter alia in their counter affidavit that the settlement of the lands in question with the appellants by the Court of Wards, was not for the benefit of the estate or advantage of the ward and that the transaction was entered into by the Wards Estate without properly applying their mind to it.
It was stated further that after the settlement was made, there was a good deal of agitation among the tenants in the locality which led to the institution of certain criminal proceedings.
In these circumstances, the matter was brought to the notice of the Working Committee of the Indian National Congress and the Working Committee was of opinion that the settlement of these lands was against public interest.
The lessees, therefore, were asked to vacate the lands and on their refusal the legislation in question was passed.
The petition was heard by a Division Bench consisting of Ramaswami and Sarjoo Pershad JJ.
Ramaswami J. 1138 decided all the points raised by the petitioners against them and held that the Act was neither ultra vires the Bihar Legislature nor was void under article 13(1) of the Constitution.
The learned Judge was further of opinion that it was not a fit case for interference by the High Court under article 226 of the Constitution.
The other learned Judge expressed considerable doubts as to whether a legislation of this type, which in form and substance was a decree of a court of law, was within the competence of the legislature and warranted by the Constitution.
He agreed, however, with his learned colleague that the case was not such as to justify an interference of the High Court in exercise of its discretionary powers under article 226 of the Constitution.
The remedy of the petitioners might lie, according to him, in a regularly constituted suit.
The result, therefore, was that the appellants ' petition was dismissed and it is the propriety of this judgment that has been assailed before us in this appeal.
Mr. P. R. Das, who appeared in support of the appeal, put forward at the forefront of his arguments, the contention raised on behalf of his client in the court below that the impugned legislation was void by reason of its violating the fundamental rights of the appellants under article 14 of the Constitution.
The point appeared to us to be of substance and after hearing the learned Attorney General on this point we were satisfied that the contention of Mr. Das was well founded and entitled to prevail, irrespective of any other ground that might be raised in this appeal.
There have been a number of decisions by this court where the question regarding the nature and scope of the guarantee implied in the equal protection clause of the Constitution came up for consideration and the general principles can be taken to be fairly well settled.
What this clause aims at is to strike down hostile discrimination or oppression or inequality.
As the guarantee applies to all persons similarly situated, it is certainly open to the legislature to classify persons and things to achieve particular legislative objects; 1139 but such selection or differentiation must not be arbitrary and should rest upon a rational basis, having regard to the object which the legislature has in view.
It cannot be disputed that the legislation in the present case has singled out two individuals and one solitary transaction entered into between them and another private party, namely, the Bettiah Wards Estate and has declared the transaction to be a nullity on the ground that it is contrary to the provisions of law, although there has been no adjudication on this point by any judicial tribunal.
It is not necessary for our present purpose to embark upon a discussion as to how far the doctrine of 'separation of powers has been recognised in our Constitution and whether the legislature can arrogate to itself the powers of the judiciary and proceed to decide disputes between private parties by making a declaration of the rights of one against the other.
It is also unnecessary to attempt to specify the limits within which any legislation, dealing with private rights, is possible within the purview of our Constitution.
On one point our Constitution is clear and explicit, namely, that no law is valid which takes away or abridges the fundamental rights guaranteed under Part III of the Constitution.
There can be no question, therefore, that if the legislation in the present case comes within the mischief of article 14 of the Constitution, it has got to be declared invalid.
This leads us to the question as to whether the impugned enactment is, in fact, discriminatory and if So, whether the discrimination made by it can be justified on any principle of reasonable classification ? The appellants, it is not disputed, are only two amongst numerous leaseholders who hold lands in raiyati right under the Bettiah Wards Estate.
It cannot also be disputed that the lands were settled with them on the recommendation of the Board of Revenue after due consideration of the respective views put forward by the Manager of the Estate on the one hand and the Collector and the Divisional Commissioner on the other.
The appellants are admittedly paying rents which are normally assessed on lands of similar 1140 description in the locality.
The learned AttorneyGeneral referred in this connection to the provisions of section 18 of the Court of Wards Act and argued that the lease in dispute was granted in contravention of that section.
Section 18 of the Court of Wards Act provides as follows: "The Court may sanction the giving of leases or farms of any property under its charge . and may direct the doing of all such other acts as it may judge to be most for the benefit of the property and the advantage of the Ward".
Apparently it makes the Court of Wards the sole judge of the benefit to the estate or advantage of the ward.
But it is said that the Court of Wards did not apply its mind properly to this matter when it granted lease to the appellants at half the usual rate of selami.
The Wards Estate thus suffered loss to the extent of nearly Rs. 4,000 which could legitimately have been recovered from any other lessee.
This contention does not impress us much; the utmost that can be said is that this could have been put forward, for what it is worth and with what result, nobody can say, as a ground for setting aside the lease in a court of law.
But that is not the question which is relevant for our present purpose at all; we were not called upon to decide whether or not the lease was a proper one or beneficial to the estate.
The question for our decision is, whether the statute contains discriminatory provisions so far as the appellants are concerned and if so, whether these discriminations could be reasonably justified ? It is clearly stated in paragraph 9 of the affidavit made by the appellants in support of their petition that there are numerous other persons to whom leases on similar terms were granted by the Bettiah Wards Estate.
Clauses (b), (c) and (d) of paragraph 9 of the affidavit stand thus: "(b) In this long course of management by tile Court of Wards, leases or settlement of lands used to be made without any selami on proper rent.
This state of affairs continued down to recent times during 1141 which period thousands of bighas were so settled with numerous persons; (c) in 1945 the authorities decided to make settlements on large scale with war returned soldiers on a selami equal to 5 times the average rent prevailing in the locality for similar lands; (d) in 1946, 1947, 1948 and 1949 a good number of settlements covering about 2000 acres of lands were settled on the basis of IO years ' rental obtaining in the locality and in some cases for good reasons, at five years ' rental." In paragraph 12 of the counter affidavit put in on behalf of the respondents, these statements are not denied.
In fact, they are admitted and the only thing said is, that these leases were granted in due course of management.
Ramaswami J. has dismissed this part of the case by simply remarking that no details of these settlements were furnished by the appellants; but no details were at all necessary when the correctness of the statements was not challenged by the respondents.
It will be interesting to note that the respondents themselves in paragraph 10 of their counter affidavit mentioned the name of Shri Prajapati Mishra as one of the persons with whom similar settlement of lands was made by the Bettiah Estate.
It is stated in that paragraph that the cases of the appellants as well as of Prajapati Mishra were brought to the notice of the Working Committee of the Indian National Congress and the Committee came to the conclusion that both the settlements were contrary to the provisions of law.
Thereupon a request was made to both these sets of lessees to restore their lands to the Estate, but whereas Prajapati Mishra returned his lands to the Bettiah Estate, the appellants refused to do so.
In reply to this statement, the appellants stated in their rejoinder that the said Prajapati Mishra did not vacate the land,% but created a trust in respect of the same, he being the chairman of the board Of trustees and the lands were still in possession of the board of trustees.
Strangely, as it seems, the State of Bihar raked up this matter again in a 148 1142 further affidavit where it was admitted that the said Prajapati Mishra did execute a trust and that the trustees took possession of the property.
It was stated, however, that Prajapati Mishra, who was one of the trustees, did actually surrender the lands in two installments but the other trustees did not, and hence legal advice was being taken to find out ways and means of recovering the property from them.
The whole thing smacks of disingenuousness and the State of Bihar, it seems, was not well advised in rely ing upon facts like these in their attempt to repel the appellants ' attack on the legislation on the ground of discrimination.
Be that as it may, there is no doubt that the appellants were not the only lessees under the Bettiah Estate who got settlement of lands at a selami of five years ' rental.
On the sworn statements of the appellants, which are not challenged by the other side, it appears that there are numerous persons occupying the same position as the appellants, who however were not subjected to this expropriatory legislation.
But the vice in this legislation goes much deeper than this.
It is not merely a question of treating the appellants differently from the other lessees under the Wards Estate, with whom settlements of land have been made on similar or identical terms.
If a lease has been given by a Court of Wards, which is not for the benefit of the estate or advantage of the ward, it is for a court of ,law to decide whether it is warranted by the terms of the Court of Wards Act.
If the lessor proceeds to cancel the lease, the lessee has a legal right to defend his claim and satisfy the court that the lease is not in contravention of law.
If, on the other hand, the lessee is actually dispossessed, he has a right to sue in court for recovery of possession of the property on establishing that he has been illegally turned out.
The dispute here, is a legal dispute pure and simple between two private parties.
What the Legislature has done is to single out these two individuals and deny them the right which every Indian citizen possesses to have his rights adju dicated upon by a judicial tribunal in accordance with 1143 the law which applies to his case.
The meanest of citizens has a right of access to a court of law for the redress of his just grievances and it is of this right that the appellants have been deprived by this Act.
It is impossible to conceive of a worse form of discrimination than the one which differentiates a particular individual from all his fellow subjects and visits him with a disability which is not imposed upon anybody else and against which even the right of complaint is taken away.
The learned Attorney General, who placed his case with his usual fairness and ability, could not put forward any convincing or satisfactory reason upon which this legislation could be justified.
It is true that the presumption is in favour of the constitutionality of a legislative enactment and it has to be presumed that a Legislature understands and correctly appreciates the needs of its own people.
But when on the face of a statute there is no classification at all, and no attempt has been made to select any individual or group with reference to any differentiating attribute peculiar to that individual or group and not possessed by others, this presumption is of little or no assistance.
to the State.
We may repeat with profit what was said by Mr. Justice Brewer in Gulf Colorado etc.
Co. vs Ellis(1) that "to carry the presumption to the extent of holding that there must be some undisclosed and unknown reason for subjecting certain" individuals or corporations to hostile and discriminatory legislation is to make the protection clauses of the Fourteenth Amendment a mere rope of sand".
In our opinion, the present case comes directly within the principle enunciated by this court in Ameerunnissa, Begum vs Mahboob Begum(2 ).
The result is that we allow the appeal and set aside the judgment of the High Court.
A writ in the nature of mandamus shall issue directing the respondents not to take any steps in pursuance of The Sathi Lands (Restoration) Act of 1950 or to interfere with the possession of the appellants in respect to the lands (1) 165 U section 150.
(2) [1953] S.C.R 404.
1144 comprised in the lease referred to in that Act.
The appellants will have their costs in both courts.
VIVIAN BOSE J. I am in entire agreement with my Lord the Chief Justice and with my learned brother Mukherjea.
GHULAM HASAN J.
I agree with my Lord the Chief Justice and with my brother Mukherjea.
BHAGWATI J. I entirely agree with the judgment just delivered by my Lord the Chief Justice and my brother Mukherjea and there is nothing which I can usefully add.
Appeal allowed.
| The Court of Wards granted to the appellants a large area of land belonging to the Bettiah Raj which was then under the management of the Court of Wards, on the recommendation of the Board of Revenue, at half the usual rates.
A few years later, the Working Committee of the Indian National Congress expressed the opinion that the settlement of the lands was against public interest, and in 1950, the Bihar Legislature passed an Act called the Sathi Lands (Restoration) Act, 1950, which declared that, notwithstanding anything contained in any law for the time being in force the settlement granted to the appellants shall be null and void and that no party to the settlement or his successors in interest shall be deemed to have acquired any right or incurred any liability thereunder, and empowered the Collector to eject the appellants if they refused to restore the lands.
The appellants, alleging that the Act was unconstitutional, applied under article 226 of the Constitution for a writ of mandamus against the State of Bihar restraining it from taking any action under the Act.
It was found that there were several other settlements of lands belonging to the Bettiah Raj on similar terms against which the Government had taken no action: Held, that the dispute between the appellants and the State was really a private dispute and a matter to be determined by a judicial tribunal in accordance with the law applicable to the case, and, as the Legislature had, in passing the impugned enactment singled out the appellants and deprived them of their right to 1130 have this dispute adjudicated upon by a duly constituted Court, the enactment contravened the provisions of article 14 of the Constitution which guarantees to every citizen the equal protection of the laws, and was void.
Legislation which singles out a particular individual from his fellow subjects and visits him with a disability which is not imposed upon the others and against which even the right of complaint is taken away is highly discriminatory.
Though the presumption is in favour of the constitutionality of a legislative enactment and it has to be presumed that a Legislature understands and correctly appreciates the needs of its own people, yet when on the face of a statute there is no classification at all, and no attempt has been made to select any individual or group with reference to any differentiating attribute peculiar to that individual or group and not possessed by others, this presumption is of little or no assistance to the State.
Ameerunnissa Begum vs Mahboob Begum ; and Gulf of Colorado etc.
Co. vs Ellis ; referred to.
|
minal Appeal No. 103 of 1952.
Appeal under article 134(l) (c) of the Constitution of India from the Judgment and Order dated the 27th October, 1952, of the High Court of Judicature for the State of Rajasthan at Jodhpur (Wanchoo C.J. and Bapna J.) in D.B. Criminal Murder Reference No. 2 of 1952, arising out of the Judgment and Order dated the 1st July, 1952, of the Court of the Sessions Judge, Pali, in Criminal Original Case No. 2 of 1951.
H. J. Umrigar for the appellants.
Porus A. Mehta for the respondent.
February 16.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal under article 134(l) (c) of the Constitution of India, by Magga and Bhagga,who have been convicted under section 302, Indian Penal Code, for the triple murders of Ganesh, Gheesa and Hardas.
The case relates to an incident which took place on the night between the 3rd and 4th April, 1951 Gheesa and Ganesh, deceased, Ratna, Govind, another Ganesh who is a witness in the case, and Hardas had gone to " Imaratia " a well in village Gadwara on that night to keep watch over the crops there.
Gheesa slept in one shed near the well, while Hardas slept in another shed some distance away, and Ratna slept in a third shed near the entrance gate.
Ganesh, deceased, Ganesh (P. W.), and Govind slept on the threshing floor further away from the well.
Some time after midnight Ratna woke up on hearing the cries of Gheesa.
It is alleged that he then saw the two accused beating Gheesa, accused Magga having in his hand a farsi and accused Bhagga having a katari and an axe.
Hardas, who woke up on hearing the cries, rushed to the aid of Gheesa and thereupon the two accused, Magga and Bhagga, fell upon him and attacked him with farsi and axe.
Ratna 975 ran away and hid himself near the well.
On an alarm being raised, one Krishna who was working on a nearby well came and witnessed the attack on Hardas.
The accused, after finishing Gheesa and Hardas went to the threshing floor where Ganesh, deceased, was sleeping.
There Magga asked Bhagga to hit Ganesh with the axe and Bhagga immediately hit Ganesh with the axe and he fell down.
Thereafter Magga hit Ganesh two or three times with the farsi on the legs and Bhagga cut the neck of Ganesh with the katari.
Govind (P.W.) entreated on behalf of Ganesh but he was threatened and was told, that if he did not keep quiet he would also be killed.
Without injuring Govind and Ganesh (P.Ws.) the accused then left the place.
Information of the incident was carried to the village by Ratna and a report of it was made to the police at 11 30 a.m. on 4th April, 1951.
In the report it was stated that " Bhagga and Magga are standing at their house with swords and are saying that they would kill more persons.
Village people are surrounding them outside the house ".
The sub inspector of police, when he arrived at the village, found the house of the accused surrounded by the village people.
The door of the house was closed from inside and the accused were standing on the chabutra inside.
Magga had a farsi in his hand and Bhagga had an unsheathed sword.
The sub inspector got the door opened, arrested the accused, and took possession of the farsi and the sword.
He also recovered the axe and a katari which were bloodstained.
The clothes of the accused were also taken possession of after the arrest and they appeared to have bloodstains on them.
The accused pleaded not guilty.
They admitted their partnership in cultivation at " Imaratia " well with the deceased but denied that any quarrel took place between them and the other partners about the cutting of the crop.
They also denied that they had gone to the well armed with various weapons and had committed the murder of Gheesa, Hardas and Ganesh.
The sessions judge on the evidence led by the prosecution felt satisfied that the prosecution case was 976 proved beyond all reasonable doubt.
It was held that the murder was brutal and advantage had been taken of the persons who were sleeping to kill them.
In the result the appellants were convicted under section 302, Indian Penal Code, and sentenced to death.
The sentence of death passed on them by the sessions judge was confirmed by the High Court after examining the evidence afresh.
In the High Court a contention was raised that the whole trial was vitiated inasmuch as it had not been conducted in accordance with procedure prescribed by law.
This contention was negatived on the ground that the irregularities committed in the course of the trial were such as were cured by the pro visions of section 537, Criminal Procedure Code.
As the objection raised concerned the validity of the trial the case was certified as a fit one for appeal to this Court.
The facts which concern the validity of the trial, shortly stated, are these: The trial began on 22nd March, 1952.
Three assessors had been summoned for that date.
Of these two were present while the third did not come.
Thereupon one person who was present in the court premises and whose name was in the list of assessors but who had not been summoned in the manner prescribed by the Code of Criminal Procedure was chosen as an assessor.
The trial then began with the three assessors so chosen, viz., Jethmal, Balkrishna and Asharam.
On the 6th June, 1952, Jethmal, one of the assessors absented himself and for some reason, which is not clear from the record, one Chimniram was asked to sit in place of Jethmal as an assessor with the result that on the 6th June, 1952, there were three assessors, viz., Balkrishna and Asharam, who had been sitting from the beginning of the trial, and Chimniram who was introduced for the first time that day.
On the 23rd June also Chimniram, Balkrishna and Asharam sat as assessors.
On 27th June, however, Jethmal reappeared and was allowed to sit and since that date four assessors sat throughout, viz., Jethmal, Chimniram, Balkrishna and Asharam.
Eventually all these four assessors gave their opinion on the first 977 July, 1952, when the trial came to an end.
It was con tended that the trial was bad as it took place in defiance of the provisions of sections 284 and 285 of the Code of Criminal Procedure and that such an illegality could not be cured by the provisions of section 537 of the Code.
In order to judge of the validity of this objection it is necessary to set out the provisions of the Code relevant to this matter.
Section 284 provides that, "When the trial is to be held with the aid of assessors, not less than three and, if possible, four shall be chosen from the persons summoned to act as such" .
The section as it originally stood required that " two or more shall be chosen as the Judge thinks fit ", so that there had to be a minimum of two assessors.
In the year 1923, that provision was amended so as to make a minimum of three assessors an essential requisite for a trial to be held with the aid of assessors.
A trial commenced with less than three assessors is not authorised by the provisions of this section as it now stands.
Therefore, unless a case comes within the provisions of the next following section 285, a trial held in defiance of the provisions of section 284 would not be legal.
Section 285, however, has no application to cases where a trial is commenced with less than three assessors.
[Vide Balak Singh vs Emperor (1); Sipattar Singh vs King Emperor (2)].
Section 285 provides : "(1) If in the course of a trial with the aid of assessors, at any time before the finding, any assessor is from any sufficient cause, prevented from attending throughout the trial, or absents himself, and it is not practicable to enforce his attendance, the trial shall proceed with the aid of the other assessor or assessors.
(2)If all the assessors are prevented from attending or absent themselves, the proceedings shall be stayed and a new trial shall be held with the aid of fresh assessors.
" In cases contemplated by this section a trial commenced with the aid of three assessors can be (1) A.I.R. 1918 Pat.
(2) A.I.R. 1942 All, 140.
978 continued and finished with the aid of less than three assessors.
This section, however, does neither authorize the substitution of an assessor for an absent assessor, nor does it authorise an addition of an assessor to the number of assessors during the course of the trial.
The effect of the provisions of sections 284 and 285 is that a trial cannot be validly commenced with less than three assessors chosen in the manner prescribed by the Code, but once validly commenced it can be continued in certain cases to a finish if some, though not all, of the persons originally appointed, attend throughout the trial.
If all of them do not attend, then a fresh trial has to be held.
An addition in the number of the assessors or a change or substitution in their personnel during the course of the trial is not warranted by the Code; on the other hand, it is implicitly prohibited.
The procedure prescribed by section 285(l) is not of a permissive nature.
It has to be followed if the conditions prescribed are fulfilled, and like section 285(2) it is of a mandatory character.
No scope is left in these provisions for the exercise of the discretion of the judge for supplementing these provisions and for holding a trial in a manner different from the one prescribed and for conducting it with the aid of some assessors originally appointed, and also with the aid of some others recruited during the trial.
Section 309 provides that when a trial is concluded, the court may sum up the evidence for the prosecution and defence and shall then require each of the assessors to state his opinion orally and shall record such opinions.
Sub clause (2) of this section enacts that the judge shall then give judgment, but in doing so shall not be bound to conform to the opinions of the assessors.
Sections 326 and 327 enact the method and manner of summoning assessors and jurors.
Section 537 provides as follows: "Subject to the provisions hereinbefore contained, no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered under Chapter XXVII or on appeal or revision on account 979 (a)of any error, omission or irregularity in the complaint, summons, warrant, charge, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under this Code, or. (c)of the omission to revise any list of jurors or assessors in accordance with section 324, or (d)of any misdirection in any charge to a jury, unless such error, omission, irregularity or misdirection has in fact occasioned a failure of justice.
" The first objection that was taken in the High Court to the validity of the trial was that Asharam who had not been summoned as an assessor could not be appointed as such and hence it should be held that the trial commenced with a minimum of two assessors in defiance of the provisions of section 284.
What happened was this: On the date fixed for the trial there was a deficiency in the number of persons who had been summoned and who appeared to act as assessors, the court then sent for Asharam whose name was in the list of assessors and ordered him to sit as an assessor.
The High Court took the view, and we think rightly, that the circumstance that the formality of issuing a summons was not gone through was a mere irregularity which was curable under section 537 of the Code, as there was no failure of justice caused on account of that irregularity and that the trial on that account could not be held to be bad.
This view is in accord with the decision of the Calcutta High Court in King Emperor vs Ramsidh Rai(1) with which we agree.
We are constrained, however, to observe that the High Court did not fully appreciate the decision of the Patna High Court in Balak Singh vs Emperor(2), when it said that that decision held a trial bad where a person was chosen as an assessor who had not been summoned.
In that case during the examination of the first witness only one qualified assessor was present in court and capable of acting as such, the judge ordered another person who happened to be present in court but was not in the official list of assessors to act as an (1) 30 Crl.
L. J .
(2) A.I.R. 1918 Pat.
420. 980 assessor, and it was held that as the trial commenced with only one assessor and not with two duly qualified assessors the trial was abortive and contrary to law.
No exception could therefore be taken to the rule stated in this decision.
The second objection against the validity of the trial taken before the High Court was founded on section 285.
It was contended that when one of the assessors appointed absented himself the court was bound, under section 285, to ascertain before proceeding further with the trial whether the absence of the assessor was due to sufficient cause and whether it was practicable to enforce his attendance and that the judge in this case failed to observe this condition which alone entitled him to continue the trial with the remaining assessors and that the defect was fatal to the validity of the trial.
The High Court held that though there was non compliance with the provisions of section 285 in the case, this irregularity was cured by section 537 as it had not in fact caused failure of justice.
We agree with the High Court in this conclusion.
It is no doubt true that the section enjoins on the judge a duty to find whether there is a sufficient cause for the non attendance of an assessor and whether it is not practicable to enforce his attendance, and ordinarily the proceedings must represent on their face whether this duty has been performed, but we think that such an omission on his part does not necessarily vitiate the trial.
We are further of the opinion that when a judge proceeds with a trial in the absence of one or two of the assessors with the aid of the remaining assessor or assessors, it may be presumed that he has done so because he was satisfied that it was not practicable to enforce the attendance of the absent assessor or assessors and that there was sufficient cause for his or their non attendance.
If, however, there is evidence to a contrary effect, the matter maybe different.
Failure to record an order indicating the reasons for proceeding with the trial with the aid of the remaining assessors can at best be an irregularity or an omission which must be held to 981 be such as to come within the reach of section 537 unless it has in fact occasioned a failure of justice.
It could not be seriously argued that such an omission can lead to such a result.
Finally the learned counsel contended, also relying on section 285, that the sessions judge had no jurisdiction or power to substitute an assessor or to reinstate the absent assessor, or to add to the number of assessors.
When the point was raised before the High Court, it fully realized that there was no provision in law which permitted such substitution of an absent assessor by another assessor or the subsequent reinstatement of an absent assessor as bad been done in this case.
It, however, felt that the irregularity was of the same nature as noncompliance with the provisions of section 285, and as such was cured by section 537 of the Code.
In regard to the addition of an assessor during the trial it said: " We have not been able to find any reported case where an assessor had been added in the middle of the trial as has been done by the learned judge.
That is perhaps due to the fact that no judge ever did such an obviously silly thing, but considering that the trial, in any case, continued with the aid of two assessors who were there throughout, there was, in our opinion, substantial compliance with the mode of trial provided in the Code and the irregularity committed by the addition of Chimniram in June, 1952, is curable under section 537 as it did not occasion any failure of justice.
The sessions judge was still the court of competent jurisdiction to try the case and all that he did was to add unnecessarily one more assessor to advise him when he had no business to do so.
We can ignore his presence altogether and as the irregularity has not caused failure of justice, the trial will not be vitiated".
In our judgment, the High Court was in error in this view.
The sessions judge during the progress of the trial not only made a change in the personnel of the assessors originally appointed and also added to their number, but he.
actually took the opinions 127 982 of all the four assessors as required by the provisions of section 309 of the Code, and acted in accordance with those opinions in convicting the two appellants.
It is plain that a unanimous verdict of four assessors is bound to weigh much more with a judge than the opinion of two persons.
We have not been able to understand how the High Court could ignore the presence of assessors altogether who had given their opinions and which opinions had been accepted by the judge.
The opinion of an assessor is exercised in the judicial function imposed upon him by law, and the judge is bound to take it into consideration and he cannot dispense with it.
The judge considered this trial as if lie had commenced it with the aid of four assessors, and taking into consideration their opinion, he convicted the appellants.
It is difficult to assess the value which the judge gave to the opinions of the assessors at the time of arriving at his finding and the High Court was in error in thinking that it did no harm and caused no prejudice.
We cannot subscribe to the view of the High Court that the trial should be taken as having been conducted with the aid of the two assessors as sanctioned by section 285, Criminal Procedure Code.
That is not what actually happened.
It is difficult to convert a trial held partly with the aid of three assessors and partly with the aid of four assessors into one held with the aid of two assessors only.
At no stage was the trial held with the aid of two assessors only.
The third substituted assessor attended a part of the trial and the added fourth assessor also attended a part of it.
None of these two were present throughout.
Thus the trial when it concluded was a different trial from the one which was commenced under the provisions of section 284, Criminal Procedure Code.
To a situation like this we think section 537 cannot be called in aid.
Such a trial is not known to the Code and it seems implicitly prohibited by the provisions of sections 284 and 285.
What happened in this case cannot be described as a mere error, omission or irregularity in the course of the trial.
It is much more serious, It 983 amounts to holding a trial in violation of the provisions of the Code and goes to the root of the matter and the illegality is of a character that it vitiates the whole proceedings.
As observed by their Lordships of the Privy Council in Subramania lyer vs King Emperor( '), disobedience to an express provision as to a mode of trial cannot be regarded as a mere irregularity.
In Abdul Rahman vs King Emperor (2), the distinction between cases which fall within the rule of section 537 and those which are outside it was pointed out by Lord Phillimore.
There it was said that the distinction between Suubramania Iyer 's case (1) and that case in which there was an irregularity in complying with the provisions of section 360 of the Code was fairly obvious.
In Subramania Iyer 's case(1) the procedure adopted was one which the Code positively prohibits and it was possible that it might have worked actual injustice, to the accused but that the error in not reading the statements of witnesses to them was of a different character, and such an omission was not fatal.
In Pulukurti Kotayya vs King Emperor(3) their Lordships again examined this question.
That was a case where there had been a breach of the provisions of section 162, Criminal Procedure Code, and it was held that in the peculiar circumstances of that case it had not prejudiced the accused and the case therefore fell under section 537 and that the trial was valid notwith standing the breach of section 162.
Sir John Beaumont in delivering the decision of the Board made the following observations which bring out the distinction between the two sets of cases: There are, no doubt, authorities in India which lend some support to Mr. Pritt 's contention, and reference may be made to Tirkha vs Nanak (4), in which the court expressed the view that section 537, Criminal Procedure Code, applied only to errors of procedure arising out of mere inadvertence, and not to cases of disregard of, or disobedience to, mandatory provisions of the Code, and to In re Madura Muthu (1) (1901) 28 l.A. 257.
(3) (1947) 74 I.A. 65.
(2) (1927) 54 I.A. 96.
(4) All 475. 984 Vannian(1), in which the view was expressed that any failure to examine the accused under section 342, Criminal Procedure Code, was fatal to the validity of the trial, and could not be cured under section 537.
In their Lordships ' opinion, this argument is based on too narrow a view of the operation of section 537.
When a trial is conducted in a manner different from that prescribed by the Code [as in Subramania lyer 's case(2)], the trial is bad, and no question of curing an irregularity arises: but if the trial is conducted sub stantially in the manner prescribed by the Code, but some irregularity occurs in the course of such conduct, the irregularity can be cured under section 537, and none the less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very comprehensive provisions of the Code.
The distinction drawn in many of the cases in India between an illegality and an irregularity is one of degree rather than of kind.
This view finds support in the decision of their Lordships ' Board in Abdul Rahman vs King Emperor( '), where failure to comply with section 360, Criminal Procedure Code, was held to be cured by sections 535 and 537.
The present case falls under section 537, and their Lordships hold the trial valid notwithstanding the breach of section 162.
" In our judgment, the trial conducted in the present case was conducted in a manner different from that prescribed by the Code and is bad and no question here arises of curing any irregularity.
The Code does not authorize a trial commenced with the aid of three named assessors to be conducted and completed with the aid of four assessors.
The substitution of one assessor by another and an addition to the number of assessors appointed at the commencement of the trial is not sanctioned by section 285, Criminal Procedure Code, nor is it authorized by section 284.
On the other hand, the language of section 285(l) read with the provisions of section 285(2) implicitly bans the holding of such a trial.
It is not possible to say with any degree (1) Mad. 82o.
(2) (1901) 28 I.A. 257.
(3) (1927) 54 I.A. 96.
985 of certainty to what extent the opinion of the outgoing and the incoming assessors who did not attend the whole of the trial influenced the decision in the case ; but as such a trial is unknown to law, it has to be presumed that it was illegal.
Mr. Mehta for the State Government contended that under section 309(2) the opinion of assessors is not binding on the sessions judge and their presence or absence does not affect the constitution of the court and that as at this trial at least two of the assessors originally appointed sat throughout the trial it should be held that the trial was substantially a trial conducted in accordance with the provisions of the Code.
The learned counsel did not go to the length of urging that a trial without the aid of any assessors whatever was a good trial under the Code.
Such a contention, if raised, would have to be negatived in view of the clear provisions of section 284 and of sub section (2) of section 285.
The appointment of at least three assessors is essential for the validity of a trial of this character at its commencement, and once validly commenced,in certain events, it can be validly concluded if at least one of them remains present throughout, while others drop out; but a trial conducted in the manner in which it was done in this case is wholly outside the contemplation of the Code and it is not possible to hold that it was concluded according to the provisions of the Code.
The provision in the Code that the opinion of the assessor is not binding on the sessions judge cannot lend support to the contention that the sessions judge is entitled to ignore their very existence.
As already pointed out, though he may not be bound to accept their opinions, be is certainly bound to take them into consideration.
The weight to be attached to such opinions may well vary with the number of assessors.
Mr. Mehta to support his contention placed reliance on the majority decision of the Madras High Court in King Emperor vs Tirumal Reddi (1).
In that case the trial continued for about seven weeks.
During that (1) Mad.
986 period one of the assessors was permitted to absent himself during two whole days, and five half days respectively, at first, so that he might visit his mother on her death bed, and subsequently, to perform the daily obsequies rendered necessary by her decease.
He then resumed his seat as an assessor and continued so to act until the termination of the trial, all the depositions recorded in his absence having been read by him on his return.
At the conclusion of the trial the sessions judge invited the opinion of each assessor, and recorded it.
The opinion of each was that all the accused were guilty and the judge concurring in that opinion, convicted.
the accused.
On appeal it was contended that the judge had acted contrary to law in allowing the assessor who had been absent to resume his seat as an assessor and in inviting and taking into consideration his opinion in deciding the case.
It was held by the majority of the court that the finding and the sentence appealed against had been passed by a court of competent jurisdiction within the meaning of section 537 of the Code and that the defect in the trial did not affect its validity and was cured by that section as the irregularity had not in fact occasioned a failure of justice.
Mr. Justice Davies took a different view.
This decision was clearly given on the peculiar facts and circumstances of that case and is no authority in support of the view contended for by Mr. Mehta.
For the reasons given above we are constrained to hold that the trial of the appellants conducted in the manner above stated was bad and the appellants have to be retried in accordance with the procedure prescribed by the Code.
In the result we allow this appeal, quash tile conviction and sentence passed on the appellants, and direct their retrial by the sessions judge in accordance with the procedure prescribed by the Code.
Appeal allowed Retrial ordered.
| Section 285 of the Criminal Procedure Code permits a trial commenced with the aid of three assessors to be continued and completed with the aid of less than three if during the course of the trial any assessor is prevented by sufficient cause from attending.
It does not, however, authorise the substitution of an assessor for an absent one nor an addition to the number of assessors during the course of the trial.
A, B and C were summoned to sit as assessors for a murder trial and as C did not appear, D who was in the list of assessors and who was present in court though not summoned, was asked to sit as an assessor, and the trial commenced with three assessors A:, B and D. A absented himself during the course of, the trial and the judge asked E to sit in place of A and proceeded with the trial for some days with B, D and E.
Later on A appeared and the trial continued till the end with the four assessors A, B, D and E: Held, (i) that the mere fact that D who had not been sum moned was allowed to sit as an assessor when the trial commenced did not vitiate the trial as it, was a mere irregularity and did not cause any failure of justice; King Emperor vs Ramsidh Rai approved.
Balak Singh vs Emperor (A.I.R. 1918 Pat.
420) explained.
(ii)though sub section (1) of section 285 imposes a duty on the judge to find out whether there was sufficient cause for the absence of an assessor and to consider whether it is not possible to enforce his attendance, it should be presumed that he has done so when he proceeds with the trial in his absence and a mere omission to record reasons for proceeding with the trial without the absent assessor would not by itself vitiate the trial ; (iii) a sessions judge, however, has no jurisdiction to substitute another person for any assessor who absents himself during the trial or to reinstate the absent assessor when be reappears and continue the trial with four assessors when the trial commenced with three assessors, and the trial in question was there fore illegal.
126 974 King Emperor vs Tirumal Reddi (I.L.R. distin guished.
|
Appeal No. 175 of 1951.
Appeal by Special Leave from the Order and Decree dated the 30th March, 1951, of the High Court of Judicature at Patna (Ramaswami and Rai JJ.) in Miscellaneous Appeal No. 19 of 1951 arising out of the Order dated the 18th December, 1950, of the 'Court of the Additional Sub Judge Second at Gaya in Title Suit No. 47 of 1950.
N. C. Chatterjee (Rameshwar Nath, with him) for the appellant.
M. C. Setalvad Attorney General for India, and Mahabir Prasad, Advocate General of Bihar (B. J. Umrigar with them) for the respondent.
February 3.
The Judgment of the Court was delivered by MAHAJAN J.
This appeal by special leave arises out of an application made by the State of Bihar against the Gaya Electric Supply Co. Ltd. under section 34 of the Indian Arbitration Act for stay of proceedings in a suit filed by the company on 28th September, 1950.
The facts relevant to this enquiry are these.
574 A licence of or the supply of electric energy in the town of Gaya was obtained by one Khandelwal in the year 1928 under the .
With the required sanction of the Government the licence was transferred to the company in 1932.
By a notification dated 23rd June, 1949, the licence was revoked by the Government with effect from 9th July, 1949.
Thereupon the company filed a suit against the State for a declaration that the revocation of the licence was arbitrary, mala fide and ultra vires.
During the pendency of the suit negotiations started between the company and the State for a settlement of the dispute and ultimately on 28th October, 1949, a deed of agreement was arrived at between them.
The effect of the agreement and the correspondence referred to therein was substantially as; follows : (a) That the company would withdraw the suit No. 58 of 1949 unconditionally on 25th October, 1949.
(b) That within three days of the withdrawal of ,the suit the State of Bihar would make an advance payment of rupees five lakhs to the company, and, simultaneously the company would formally hand over the possession of the undertaking to an authorized officer of the Government.
(c) That both parties will make their respective valuations within three months of talking over the undertaking and any balance of money found due to the company as per Government valuation will be paid to the company and in case of overpayment the excess paid to the company on account of the " on account payment " of rupees five lakhs will be refunded to the, Government.
(d) That in the case of any difference or dispute between,the parties over the payment of the balance which may be found due after valuation such dispute shall be submitted to the sole arbitration of a single arbitrator who should be a high government officer of the provincial government of rank equal to or higher than a Divisional Commissioner and his award shall be binding and final on both parties.
575 The arbitration clause is contained in a letter dated 13th October, 1949, and was substantially accepted by the company in its letter dated 17th October, 1949.
As set out by the State Government in its application under section 34, it runs as follows " In the case of any difference or dispute between the parties over the valuation as arrived at by the Government and that arrived at by the company, such difference or dispute, including the claim for additional compensation of 20 % shall be referred to arbitration. " In pursuance of the agreement the respondent took over the undertaking on 28th October, 1949, and also made a payment of rupees five lakhs to the company.
On the 19th January, 1950, the company sent a statement of valuation of the assets amounting to RS.
22,06,072, to the Chief Electrical Engineer, Bihar.
The Chief Electrical Engineer characterized the valuation of 22 lakhs by the company as fantastic and stated that according to a rough valuation the amount would be ' approximately five lakhs and that the final valuation would be settled after the company had furnished a detailed history of the plants and machineries.
The company declined to give any further details and stated that time was of the essence of the. contract and it would be extended from 28th January, to 15th February, 1950 On 6th April, 1950, the Chief Electrical Engineer intimated that the 'valuation amounted to Rs. 6,56,221.
No reply to this letter was received and the State Government intimated to the company that as difference and dispute had arisen relating to valuation, Mr. M. section Rao, I.C.S. was being appointed as sole arbitrator to decide the dispute.
On 28th September, 1950, the company instituted the suit, the subject matter the application for stay, after necessary notice under section 80 of the Code of Civil Procedure.
In the plaint it was alleged ,that as the State Government had failed and neglected to make its valuation or to make payment to the 576 company by the 15th March, 1950, it committed a breach of the agreement and by reason of this breach the company had rescinded the agreement and had forfeited the sum of five lakhs paid as advance by the State.
The company prayed inter alia for the reliefs of declaration that the, electrical undertaking belonged to them, for damages, for appointment of receiver and for injunction.
On the 9th October, 1950, the State Government filed the present appli cation under section 34, of the Indian Arbitration Act.
It was stated therein that the company had with a, dishonest and mala fide motive and with a view to avoid the decision of the matter in dispute in arbitration instituted the suit on incorrect and false allegations.
that the arbitration agreement was still subsisting and valid and binding on the parties and could not be taken as having been rescinded as alleged by the company, that the cause of action as alleged in the plaint being noncompliance with the agreement the suit arose out of and related to the agreement and was covered by the arbitration clause and that the State Government was ready and willing to have the dispute settled by arbitration.
The company denied the allegations of mala fides and pleaded that the arbitration clause was no longer in existence and that even assuming it to be in existence, the suit was in no way connected with the 'same and it was contended that the suit should not be stayed.
The subordinate judge held that the suit was no in respect of any matter agreed to be referred, and that the court had no ' jurisdiction to stay the proceedings.
In the result the stay application was dismissed.
Against this order the State Government appealed to the High Court.
The High Court held that the dispute in the suit was one which arose out of or was in respect of the agreement and that the question in the suit was directly within the scope of the arbitration clause.
By an order of this court dated 22nd May, 1951, the company was granted special leave ' under article 136(1) of the Constitution. ' 577 Section 34 of, the Indian Arbitration Act runs thus "Where any party to an arbitration comment Cost any legal proceedings against any other party to the agreement in respect of any matter agreed to be ,referred, any party to such legal proceedings may, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at ,the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of 'the arbitration, such authority may make an order staying the proceedings.
" From the language of the section it is quite clear that the legal proceeding which is sought to be stayed must be in respect of a matter which the parties have agreed to refer and which comes within the ambit of the arbitration agreement.
Where, however, a suit is commenced as to a matter which lies outside the submission, the court is bound to refuse a stay.
In the words of Viscount Simona L. C. in Heyman vs Daruins Ltd ' (1).
the answer to the question whether a dispute falls within an arbitration clause in a contract must depend on (a) what is the dispute, and (b) what disputes the arbitration clause covers.
If the arbitration agreement is broad and comprehensive and embraces any dispute between the parties "in respect of" the agreement, or in respect of any provision in the agreement, or in respect of anything arising out of it, and one of the parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself. ' Where, however, the party soaks to avoid the contract for reasons dehors it, the arbitration clause cannot be resorted to as it goes along with other terms of the contract.
In other words, a party cannot rely on a term of the contract (1) , 578 to repudiate it and still say the arbitration clause should not apply.
If he relies upon a contract, be must, rely on it for all purposes .
Where, however, an arbitration clause is not so comprehensive and is not drafted in the broad language which was, used in the House of Lords,case, namely ' "in respect of" any agreement, or in respect of something, arising out of it", that proposition does not hold good.
The arbitration clause is a written submission agreed to by the parties in a contract and like every written submission to arbitration must be considered according to its language and in the light of the circumstances in which it is made.
Now as regards the first question, viz., what is the present dispute about, the answer is to be gathered from paragraphs 14 to 17 of the plaint.
It is averred therein that the Government of Bihar committed breach of the agreement and failed to make any, valuation of the undertaking or pay the balance of the compensation money, that time being of the essence of the contract, the defendant failed and neglected to complete the valuation within the time originally fixed or the extended time, and that by reason of the breach of contract the plaintiff rescinded the agreement and forfeited the sum of rupees five lakhs and that it is entitled to compensation for the wrongful deprivation of the use of its property.
No claim has been made in the plaint for the valuation of the undertaking or for the payment of any compensation for the undertaking; on the other hand, the claim in the suit is founded on the rescission of the agreement containing the arbitration clause and on a breach of that agreement.
These are matters which may well be said to arise out of the agreement and if the arbitration clause was broadly worded and stated that all disputes arising out of the agreement would be referred to arbitration, it could then probably have been said that the scope of the suit was within the ambit of the arbitration clause, but the clause here is differently worded.
The clause here is that if any difference.
or dispute arises between the parties over the payment of the 579 balance which may be found due after valuation such dispute shall be submitted to the sole arbitration of a single arbitrator.
The scheme of the agreement is that the Government was to make a valuation as laid ' down in the within three, months of taking over the undertaking and any balance of money found due to the company as per Government valuation was to be paid by the Government, and in case of over payment, the excess paid to the company on account of the "on account payment" of rupees five lakhs mentioned in paragraph 1 had to be refunded to government.
In the case of any difference between the parties over the valuation as arrived at by the Government and that arrived at by the company, such difference or dispute, including the claim for additional compensation of twenty per cent.
had to be referred to arbitration a scope of it is arbitration clause is a very narrow one.
It only confers jurisdiction on the arbitrator on the question of valuation of the undertaking pure and simple and does not say that all disputes arising out of the agreement or in respect of it will be decided by arbitration.
Questions relating to the breach of contract or its rescission are outside the reach of this clause.
The arbitrator has not been conferred the power by this clause to pronounce on the issue whether the plaintiff was justified in claiming that time was of the essence of the contract and whether the State Government committed a breach of the contract by not making a valuation within the time specified.
This clause is therefore no answer to the company 's querry "Show me that I have agreed to refer the subject matter of the suit to an arbitrator.
" Besides this clause in the agreement there is nothing else which can deprive the court of its jurisdiction to decide the plaintiff 's suit as brought.
Ramaswami J., with whom Rai J. concurred, held that upon a perusal of the term,; of the contract and of the correspondence it was obvious that no stipulation was made that the compensation money 75 580 should be paid within the period of three months, that on the contrary, the intention of the parties that the Government would pay compensation money only after the award had been made by the arbitrator.
Now this is the very point which would be in issue in the suit itself, and the learned Judge was in error in considering and deciding this point in this enquiry under section 34.
The validity of the plaintiff 's contention in the suit cannot be gone into by that court exercising jurisdiction under this section as its function is a very limited one.
The only point in such cases to be decided is whether the claim which is brought whether it is good, bad or indifferent comes within the submission to arbitration.
It may be that there are grounds upon which the defendant would be able to satisfy the proper tribunal that the plaintiff 's claim was frivolous and vexatious, but those considerations, as pointed out by Banks L. J in Monro vs Bognor Urban Council (1), are material only if the question to be considered is whether the case made was a frivolous and vexatious one and ought to have had no weight at all upon the question of what the plaintiff 's claim in fact was and one can only find out what his claim is by looking at the plaint.
The learned Judges in the High Court seem to have thought that the arbitration clause here had been drafted broadly and that all "disputes arising out of or in respect of the agreements were referable to arbitration.
Their reliance on the decision of the Calcutta High Court in Harinagar Sugar Mills Ltd. vs Skoda India Ltd.(") in support of the decision indicates the error.
In that case the arbitration clause was drafted in a comprehensive language and stated that a dispute arising out of the agreement had to be referred to arbitration.
Their reference to the case of Governor General in Council vs Associated Livestock Farm Ltd. (3) also shows that they were under the same erroneous impression.
In this case the arbitration clause was in these terms : (1) [1915] 3 K.B. i67.
(2) (3) A.I.R. 1948 Cal, 230, 581 "Any dispute or difference arising out of the contract shall be referred to the arbitration of the officer sanctioning the contract whose decision shall be final and binding.
" It is obvious that these decisions could have no relevance to the arbitration clause as drawn up in the present case.
If the nature of the claim is as we have indicated above, it seems plain that it does not come within the scope of the submission.
In our judgment, therefore, the decision of the learned Subordinate Judge was right and the Judges of the High Court were in error in reversing it.
In the result the only course open to us is to allow the appeal with costs and to say that the plaintiff 's claim is not within the scope of the submission and that the petition under section 34 was rightly dismissed by the Subordinate Judge.
Appeal allowed.
Agent for the appellants Rajinder Narain.
Agent for the respondent P. K. Chatterji.
| If the arbitration agreement is broad and, comprehensive and embraces any dispute between the parties in respect of the agreement, or in respect of any provision in the agreement, or in respect of anything arising out of it, and one of the parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself.
Where, however, the party seeks to avoid the contract for reasons dehors it, the arbitration clause cannot be resorted to as it goes along with other terms of the contract.
In other words, a party cannot rely on a term of the contract to repudiate it and still say the arbitration clause should not apply.
Where, however, an arbitration clause is not so comprehen sive and is not drafted in the broad language namely " in respect of " any agreement, or "in respect of something arising out of it", that proposition does not hold good.
The arbitration clause is a written submission agreed to by the parties in a contract and like every written submission to arbitration must be considered according to its language and in the light of the circumstances in which it is made.
Disputes which arose between the State of Bihar and an Electric Supply Company whose licence had been revoked by the State were settled by an agreement which provided that the State should make an advance payment of Rs. 5 lakhs to the company, and the company should hand over the undertaking to the State.
The undertaking was to be valued, within 3 months and if any money was found due to the company as per the Government valuation over 5 lakhs it will be paid to the company and if the valuation was less than 5 lakhs the company would refund the excess received by it.
The agreement, contained an arbitration clause which ran as follows: " In the case of any difference or dispute between the parties over the valuation as arrived at by the Government and that arrived at by the company any such difference or dispute including the claim for additional compensation of 20% shall be referred to arbitration.
" The company instituted a suit against the State alleging that the State bad failed to make its valuation.
and to make, payment of the excess within the time fixed and as time was of the essence of the contract, it had rescinded the agreement, and praying for a declaration that the undertaking belonged to it, for damages and appointment of a receiver.
The State applied under section 34 of the Arbitration Act for stay of the suit: Held, that the scope of the arbitration clause was very narrow; it conferred jurisdiction on the arbitrator only on the question of valuation of the undertaking pure and simple.
Questions relating to the breach of contract or its rescission were outside the scope of the clause and the suit could not be stayed under section 34.
Heyman vs Darwins Ltd. (119421 A.C. 356) referred to.
Harinagar Sugar Mills Ltd. vs Skoda (India) Ltd. (A.I.R. and Governor General in Council vs Associated Livestock Farm Ltd. ([1937] distinguished.
|
Appeal No. 121 of 1951.
Appeal from the Judgment and Decree dated 15th December, 1948, of the High Court of Judicature at Madras (Subba Rao and Pancha,Pakesa Ayyar JJ.) in Appeal No. 474 of 1945 arising out of the Judgment and Decree dated 3 1 st July, 1945,, of the Court of the Subordinate Judge of Tenali in Original Suit No, 24 of 1944.
130 1002 M. C. Setalvad, Attorney General for India, (N. Subrahmanyam and K. R. Chowdhury, with him) for the appellants.
K. section Krishnaswamy Aiyangar (M. Seshachalapathi, with him) for the respondents.
February 26.
The Judgment of the Court was delivered by DAS J.
This appeal arises out of a suit for recovery of possession of certain immovable properties measuring about 93 acres and 33 cents which are more fully and particularly set out and described in Schedule A to the plaint.
That suit was instituted by Konduru Venkatapayya, respondent No. 1, in his capacity as the Executive Officer appointed by the Government on the 15th July, 1942, in respect of Sri Somasekharaswami Temple at Kotipalle, hamlet of Donepudi, a temple notified on the 26th October, 1939, under the provisions of Chapter VIA of the Madras Hindu Religious Endowments Act (Act 11 of 1927).
The suit was instituted in forma pauperis.
The claim for ejectment of the defendants was founded on the allegation that the properties belonged to the temple, having been given to it by an Inam grant made in 1770 A.D. by Janganna Rao, the then Zamindar of Rachur, that the defendants I to 16 and their predecessors were Archakas rendering Nitya Naivedya Deeparadhana services and as such were in possession of the properties for and on behalf of the temple and that defendants 17 to 43 were the lessees under the Archakas and that the defendants I to 16 were wrongfully claiming the properties as their own and the other defendants claimed to be in possession of portions of the properties as their lessees.
The plaintiff instituted this suit after having given registered notice to the defendants to make over possession of the suit properties to the plaintiff as the Executive Officer of the temple but the defendants were still continuing in such possession in spite of such notice.
The defendants filed written statements raising various contentions 1003 and issues to which it is not necessary now to refer.
The learned Subordinate Judge by his judgment dated the 31st July, 1945, decreed the plaintiff 's suit.
Some of the defendants preferred an appeal to the High Court but the High Court dismissed the same.
Those defendants obtained leave of the High Court to appeal to the Federal Court and that appeal has now come up for hearing before us.
The only two points which were raised before us, as before the High Court, are (1) whether the Inam grant was made in favour of the temple or whether the grant was made in favour of the Archakas burdened with the duties of service, and (2) what right did the grant confer on the grantee whether it was a grant of the land itself or only of the melvaram interest in the properties.
It is urged by the learned Attorney General that as the defendants and their predecessors have been in possession of the properties from ancient times it should be presumed that their possession originated in some lawful title conferred on them.
In short, the contention, founded on several judicial decisions, is that the principle of a lost grant should be applied in this case in favour of the Archakas who have been in quiet possession for over a century and a half.
There is no doubt, on the authorities, that a presumption of an origin in some lawful title may in certain circumstances be made to support possessory rights long and quietly enjoyed where no actual proof of title is forthcoming but it is equally well established that that presumption cannot be made where there is sufficient evidence and convincing proof of the nature of the grant and the persons to whom it was made.
It is true that the original grant is not forthcoming but turning to the evidence we find two documents which appear to us to be decisive on the question of title.
The first one is Exhibit P/3, a copy of the relevant entries in the Inam Register of 1860.
This Inam Register was prepared after enquiries made by the Inam Deputy Collector and the statements furnished at that time by the then Archakas were taken into consideration for 1004 preparing the register.
The copy of the statement filed by the then Archakas before the Inam Deputy Collector was exhibited in this case as Exhibit D/3.
In the Inam Register (exhibit P/3) under the several columns grouped under the general heading " Class extent and value of Inam " this Inam is classified in column 2 as Devadayam.
In column 3 are set out the survey numbers together with the word ' Dry ' indicating the nature of the land comprised within the survey numbers.
The areas are set out in column 5.
The heading of column 7 is " where no survey has been made and no assessment fixed by Government, the cess paid by the ryot to the Inamdar, or the average assessment of similar Government land should be entered in column (7) ".
Under this heading are set out the amounts of respective assessments against the three survey numbers totalling Rs. 198139.
We then pass on the next group of columns under the general heading " Description, tenure and documents in support of the Inam ".
Under column 8 'description of Inam 'is entered the remark " For the support of a Pagoda.
Now kept up ".
The entry in column 9 shows that the Inam was free of tax, i.e., sarvadumbala.
Under column 10 headed "Hereditary, unconditional for life only or for two or more lives " is mentioned ' Permanent '.
The name of the grantor as stated in column 1 1 is Janganna Rao and the year of grant is fasli 1179, A.D. 1770.
In column 13 the name of the temple is set out as the original grantee.
The name of the temple and the location of the temple are also set out under columns 16 and 17.
Turning now to the statement exhibit D/3 caused to be written and filed by the then Archakas during the Inam Inquiry held in 1859 60 Sree Somasekharaswami Varu is given as the name of the Inamdar and the present enjoyer.
The name of the temple is also set out under columns 3,5,6 and 12.
Under the heading " Income derived from the Inam whether it is sarvadumbala or jodi.
lf jodi the amount" in column 13 is stated " sarvadumbala Inam Cist according to the rate prevailing in the neighbouring fields Rs. 26631.
" This statement (exhibit D/3) bears 1005 the signature of the Karnams and the witnesses.
it will be noticed that neither in the Inam Register exhibit P/3 nor in the statement exhibit D/3 is there any mention of the Archakas as the grantee or for the matter of that, having any the least interest, personal or otherwise, in the subject matter of the Inam grant.
The two exhibits quite clearly indicate that the Inam grant was made in favour of the temple by the gurant or and that in the face of this definite evidence and proof of the nature of the grant, no presumption of a lost grant can be made in favour of the Archakas.
We, therefore, in agreement with the High Court, hold that the deity was the grantee and the first question raised before us must be answered against the appellants.
The learned Attorney General next contends that, assuming that the Inam grant was made in favour of the temple, it was only a grant of melvaram interest and that the Archakas who have the kudivaram rights cannot be ejected.
He relies strongly on an unreported judgment of the Madras High Court in Appeal No. 213 of 1942 (The Board of Commissioners for the Hindu Religious Endowments, Madras vs Parasaram Veeraraghavacharyulu and others) where it was held: "The records of the Inam settlement really contain only one clear indication as to the precise extent of this grant.
The statement at the Inam Inquiry, Exhibit V, upon which the decision of the Inam Commissioner was presumably based contains a column headed " Income realised from the Inam sarvadumbala " and in that column we find the entry "Rs. 14 sarvadumbala".
On its face this entry seems to show that the income of the Inam was Rs. 14 free from all charges.
We find, however, from the Inam Register, Exhibit IV, that the assessment of the Inam on the basis of the enjoyment of 16 97 acres is also Rs. 14.
This seems to indicate that the extent of the Inam was the amount of the assessment.
* * * * * It seems, therefore, that the decision must rest on the recital in Exhibit V that the income of the Inam 1006 consists of Rs. 14, read along with the recital in Exhibit TV that the assessment on the land also comes to Rs. 14.
On these materials we confirm the findings of the learned District Judge, although we do not accept his reasoning, and hold that the grant is a grant of melvaram only.
" The facts of that case appear to us to be different from those in the present case.
The Archakas in.
that case were found to have the kudivaram rights from before the Inam grant was made.
In the copies of the Inam Register and Inam Statement filed in that case the Archakas were shown as the grantees and the present enjoyers of the Inam grant and the amount shown under the heading in column 2 of the Inam register as the assessment was the same as the amount shown under column 3 of the Inam Statement under the heading "Income derived from Inam".
In the case before us the Archakas are nowhere mentioned in either Exhibit P/3 or in Exhibit D/3, there is no evidence that they had any title to kudivaram rights and finally the amount of assessment shown under column 7 of the Inam register, Exhibit P/3, is Rs. 198139, whereas the amount shown as income derived from the Inam as shown in column 13 of the Inam Statement, Exhibit D/3, is Rs. 26631.
Apart from these points of distinction the decision relied on by the learned Attorney General appears to us to be of doubtful authority.
As will appear from the passages quoted above, the decision rested mainly, if not entirely, on the fact that the amount of assessment and the amount of income were the same and the conclusion was drawn that the Inam grant comprised only of the revenue assessment, i.e., of melvaram rights.
We are unable to follow the reasoning.
Whether the Inam comprised the land itself, that is to say, both melvaram and kudivaram rights or only the melvaram rights, the entries had to be made in the Inam Register in the same form and even in the case of the grant of the land itself comprising both the rights the amount of assessment had to be set out under column 7 of the Inam Register for it is not 1007 suggested that a different form had to be used where the grant comprised both the rights.
It follows, therefore, that no inference that the Inam grant comprised only melvaram rights can be inferred from the fact that under column 7 only the amount of assessment is set out, and, therefore, the reasoning on which the decision relied on by the learned Attorney General was founded cannot be supported as correct.
Indeed, that decision has been dissented from by another Bench of the Madras High Court in Yelamanchili Venkatadri & another vs Vedantam Seshacharyulu and others (1).
In the present case the High Court was, in our opinion, clearly right in preferring the last mentioned decision to the unreported decision mentioned above.
Having regard to the different entries under the different columns in Exhibit P/3 and Exhibit D/3 there is no escape from the position that this Inam grant in favour of the temple comprised both the interests in the land.
An argument was sought to be raised by the learned Attorney General that the grantor Janganna Rao was only the Collector of the revenue and as such could not grant more than what he had got.
Reference was made to the Kistna District Manual by Gordon Mackenzie but it appeared that the person therein mentioned was not the same grantor as we are concerned with in this case and the point was not pursued and nothing further need be said about it.
Finally, the learned Attorney General submits that these Archakas who were rendering services faithfully from generation to generation from ancient times should not, in equity, be ejected from the entire lands and that they should be allowed to remain in possession of the lands and be permitted to appropriate to themselves the expenses of the services and a reasonable remuneration and the rest of the income should be made over to the temple as its property.
Reference was made to two unreported decisions of the Madras High Court in Appeal No. 218 of 1946 (1) A.I.R. 1948 Mad. 72, 1008 Dandibhotla Kutumba Sastrulu vs Kontharapu Venkatalingam, and in Appeal No. 709 of 1944, Buddu Satyanarayana vs Dasari Butchayya, Executive Officer of the Temple of Sri Malleswaraswami Varu, China Pulivaram.
In a proceeding for the framing of a scheme relating to a temple it may be permissible to take into account the claims, moral if not legal, of the Archakas and to make some provision for protecting their rights, but those considerations appear to us to be entirely out of place in a suit for ejectment on proof of title.
If the two decisions lay down, as it is contended they do, that the principles which may have a bearing on a proceeding for framing of a scheme or for enforcing the scheme that is framed may be applied to a case of the kind we have now before us it will be difficult for us to uphold them either on authority or on principle.
Further what is the conduct of the Archakas defendants appearing on the record of this case ? Although they are Archakas they actually asserted an adverse right in the face of the honest admission of their predecessors in title, made in the Inam statement Exhibit D 3.
Such conduct cannot but be regarded as disentitling them from any claim founded on equity.
The explanation put forward for the first time in paragraph 7 of their present statement of case filed in this Court explaining the absence of a claim to the property by their predecessors at the time of the Inam Inquiry namely, respect for the deity enjoined by Agama Shastra is not at all convincing.
Further, the giving of such equitable relief must depend on questions of fact, namely, the income of the property, the reasonable expenses and remuneration for the services, the amounts appropriated by them all this time and so forth which have not been investigated into in this case, because, no doubt, this question of equitable relief has been put forward as a last resort after having lost their battle.
We do not think in the circumstances of the case any indulgence should be shown to the Archakas even if it were permissible for the Court in a suit of this description to give such relief.
1009 The result, therefore, is that this appeal must fail and is accordingly dismissed with costs.
Appeal dismissed.
Agent for appellant: section Subramaniam.
Agent for respondent: M.S.K. Aiyangar.
| Though a presumption of an origin in some lawful title may in certain circumstances be made to support possessory rights long and quietly enjoyed where no actual proof of title is forthcoming, that presumption cannot be made where there is sufficient evidence and convincing proof of the nature of the grant and of the persons to whom it was made.
In the case of an inam grant, the mere fact that the amount shown in the In am Register as the assessment was the same as the amount shown in the Inam Statement under the heading "income from the inam" does not lead to an inference that the grant comprised only the melvaram rights and not the land itself.
Though in a proceeding for framing a scheme relating to a temple it may be permissible to take into account the claims, moral though not legal, of the archakas and to make some provision to protect their interest, such considerations are out of place in a suit for ejectment of the archakas on proof of title, especially when they set up an adverse title and deny the title of the temple.
[On the facts their Lordships held (i) that there was clear evidence that the inam grant in question was made by the grantor in favour of the temple and that in the face of this definite evidence as to the nature of the grant no presumption of a lost grant can be made in favour of the archakas of the temple; and (ii) that the grant was of the land itself and not of melvaram rights only.]
|
Appeals Nos. 10 and 10 A of 1952.
Appeal from the Judgment and Order dated 11th January, 1950, of the High Court of Judicature at Madras in Cases Referred Nos. 80 of 1946 and 38 of 1948.
M. C. Setalvad, Attorney General for India, (G. N. Joshi and P. A. Mehta, with him) for the appellant.
section Krishnamachariar for the respondent.
465 1952.
December22.
The Judgment of the Court was delivered by DAS J.
These two consolidated appeals are directed against the Judgment and order made on January 11, 1950) by the High Court of Judicature at Madras in References No. 80 of 1946 and No. 38 of 1948 under section 66 of the Indian Income tax Act whereby the High Court relying on its earlier decision in Commissioner of Income tax, Madras vs B. Rm.
M. Sm.
Sevugan alias Manickavasagam Chettiar(1) held that the references were incompetent and accordingly refused to answer the questions raised therein.
The facts are shortly as follows.
The respondent who is a Nattukotai Chettiar had, his headquarters at Karaikudi in India and also carried on his money lending business at branches at Maubin, Kualalumpur and Singapore.
He also had income from properties at Maubin and Singapore.
For the assessment year 1941 42 the Income tax Officer calculated the assessee 's accrued foreign income as Rs. 29,403 at Maubin, Rs. 27,731 at Kualalumpur and Rs. 34,584 at Singapore, in all Rs. 91,718.
After deducting out of this amount Rs. 4,500 allowed under the 3rd proviso to section 4 (1) of the Act, the Income tax Officer computed the total assessable foreign income at Rs. 87,218.
Out of the total remittances of Rs. 84,352 the Income tax Officer allocated Rs. 7,900 to the accrued income of Maubin and Rs. 62,315 to those of Kualalumpur and Singapore and the balance of Rs. 14,137 to the taxed income of earlier years.
The Income tax Officer disallowed the claim of the assessee to deductions under several heads.
On the basis of the total foreign income of Rs. 67,218 and income from ' other sources the Incometax Officer calculated Rs. 23,266 8 0 to be due by the assessee on account of income tax, super tax and surcharges thereon and by his assessment order dated January 31, 1942, made this amount payable on or before February 25, 1942.
The assessee preferred an (1) [1948] 16 I.T.R. 59; ; A.I.R. 1948 Mad, 418 466 appeal to the Appellate Assistant Commsioner against the disallowance of the several items of his claim including the claim for replantation expenses amounting to$498incurred at Kualalumpur and a bad debt of $ 15,472 at Singapore.
The Appellate Assistant Commissioner by his order dated May 25, 1942, allowed some of the several objections but disallowed the items of replantation expenses and ba` debt and reduced the assessment to Rs. 22,548.
The assessee took further appeal before the appellate Tribunal against the disallowance of the several claims by the Appellate Assistant Commissioner including the two items mentioned above.
The Appellate Tribunal by its order dated August 20, 1943, held that the replantation expenses "will be allowed to the appellant as expenses.
" As regards the bad debt the Tribunal held that it was permissible and that "the deduction claimed will, therefore, be allowed.
" The result was that the appeal was partly allowed.
The matter came back before the Income tax Officer on September 26, 1945.
Deducting Rs. 778 on account of replantation expenses the Kualalumpur income was reduced to Rs. 26,953 and after deducting Rs. 24,175 on account of the bad debt the Singapore income came down to Rs. 10,409.
These two reduced amounts together with Rs. 29,403 being the income 'from Maubin made up the total accrued income of Rs. 66,765.
Out of this amount Rs. 4,500 was deducted on account of unremitted profits of Maubin under the 3rd proviso to section 4(1) of the Act, leaving a balance of Rs. 62,265.
Out of the remittances the Income tax Officer allocated Rs. 7,000 towards the accrued income of Rs. 29,403 from Maubin and Rs. 37,362 against the totarl accrued income of Kualalumpur and Singapore.
He also allocated Rs. 24,549 as remittances out of assessed profits of previous years, leaving a balance of Rs. 13,541.
This amount the Income tax Officer considered as remittances out of earlier years ' unassessed income and held it to be asses. able to tax.
After adding Rs. 13,541 to Rs. 62,265 being the net accrued income of the year 467 from Maubin, Kualalumpur and Singapore, the Income tax Officer arrived at the total foreign income of Rs. 75,806.
On the basis of this foreign income together with other income the Income tax Officer.
recalculated the amount of income tax, super tax and surcharges thereon at Rs. 22,802 6 0 and after giving credit for certain amounts, found Rs. 21,211 14 0 as the balance due which by his order dated September 26, 1945, was made payable in equal moiety on or before September 30, 1947, and March 31, 1948.
He, however, did not issue any notice of demand under section 29 of the Act.
Being aggrieved by the inclusion of Rs. 13,541 as the alleged unassessed foreign income of earlier years remitted to India during the year of account the assessee preferred an appeal before the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner was not satisfied that the assessee had any right of appeal under section 30 of the Act for there had been no assessment under section 23 and no notice of demand had been served on the assessee under section 29 of the Act.
Accordingly the Appellate Assistant Commissioner by his order dated November 19, 1945, declined to admit the appeal.
He, however, expressed the view that the assessee 's remedy might lie in a miscellaneous application to the Tribunal complaining that the Income tax Officer had either misconstrued or had not given effect to the order of the Appellate Tribunal.
The assessee then brought a miscellaneous application to the Appellate Tribunal.
The Appellate Tribunal held that the.
finding of the Income tax Officer that the sum of Rs. 13,541 was to be assessed as untaxed profits of earlier years remitted to India in the accounting year did not arise in the course of giving effect to the Appellate Tribunal 's order and by its order dated February 20, 1946, cancelled that finding and directed the Income tax Officer to revise the computation accordingly.
The last mentioned order having been served on the Commissioner of Income tax, Madras, on March 8, 468 1946, the latter on May 1, 1946, made an application before the Appellate Tribunal under section 66(1) of the Act and prayed that three questions formulated by him in his petition should be referred to the High court.
The contention was that the Appellate Tribunal had no jurisdiction in law to entertain, consider and pass the order which it did on the miscellaneous application seeing that it was neither an appeal under section 33 of the Income tax Act nor could it be regarded as a rectification under section 35 of any mistake committed by the Bench.
The Appellate Tribunal took the view that although no specific provision was made in the Act by which it could give effect to its order or explain any ambiguity in such an order by a later order in any miscellaneous application filed by any party, such power, nevertheless ', was inherent in" the Tribunal.
The Tribunal accordingly thought that a point of law did arise and on August 23, 1946, referred the following question to the High Court, namely: "Whether in the facts and circumstances of this case the order of the Bench dated 20th February, 1946, in the miscellaneous application is an appropriate order and is legally valid and passed within the jurisdiction and binding on the Income tax Officer.
" The Tribunal declined to refer the other questions formulated by the Commissioner.
This reference came to be numbered as Case Referred No. 80 of 1946.
It appears that pursuant to an order made by the High Court on March 30,1948, on the application of the Commissioner of Income tax under section 66 (2) of the Act the Tribunal referred the following question to the High Court: " If the answer to the question already referred to the High Court by the order of the Appellate Tribunal dated 23rd August, 1946, is in the affirmative,, whether, in the circumstances and on the facts of the case, the recomputation made by the Income tax Officer pursuant to the decision of the Appellate 469 Tribunal in R.A.A. No. 53 (Madras) of 1942 43 was valid and correct." The Appellate Tribunal made this further reference on July 19, 1948, which came to be numbered as Case Referred No. 38 of 1948.
The two referred cases came up for consideration before a Bench of the Madras High Court and it was held that the reference under section 66(1) was incompetent in view of the earlier decision of that Court mentioned above which they felt to be binding on them and accordingly the Bench declined to answer the questions.
The Commissioner of Incometax thereafter applied for and obtained leave to appeal to this Court from the decisions in both the references and obtained such leave on his undertaking to pay the costs of the assessee in any event.
The two appeals were thereafter consolidated and have come up before us for final disposal.
Section 66 A (2) gives to the aggrieved party a right of appeal to this Court from any judgment of the High Court delivered on a reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to this Court.
Section 66, (5) provides that the High Court upon the hearing of any such case referred to it under section 66(1) and (2) shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded.
During the opening of the case by the learned Attorney General a question arose as to whether the simple refusal of the High Court to bear the case on the ground that the reference was incompetent was a decision and judgment such as is contemplated by section 66(5) of the Act from which alone a right of appeal to this Court is given.
While maintaining that the decision and judgment of the Madras High Court fell within the meaning of section 66(5) the learned Attorney General for greater safety asked that the appeal may be treated as one on special leave granted by this Court under article 136 of the Constitution.
The learned Advocate appearing for the 470 assessee respondent did not object to this prayer and accordingly we gave leave to the appellant under article 136 and treated this appeal as one filed pursuant to such leave.
In the circumstances it is not necessary for us to express any opinion on the appealability of the order of the High Court under section 66 A of the Act.
The learned Attorney General contends that the decision relied on by the High Court has no application to the facts of the present case.
In that case the Tribunal by its order dated July 11, 1944, allowed an appeal from the Appellate Assistant Commissioner and cancelled the assessment which it held to be illegal.
This order was served on the Commissioner shortly thereafter.
On October 5, 1944, an application was made to the Tribunal by the Income tax Officer under section 35 to correct a statement contained in the statement of facts in the order.
More than 60 days after the date of the service on him of the order of July 11, 1944, to wit on October 7, 1944, the Commissioner made an application under section 66 (1) of the Act requiring the Tribunal to refer to the High Court the question as to the correctness of its decision embodied in the order of July 11, 1944.
Both the applications were disposed of on the same day, namely, January 17, 1945, when the application for rectification was granted and a case was stated for the opinion of the Court as prayed.
Section 66 (1) requires the application to be made within 60 days of the date on which the applicant is served with notice of an order under sub section (4) of section 33.
It was held that the granting of an application for rectification under section 35 and correcting the error in the order was not an order under section 33 (4) and, therefore, was not one in respect of which section 66 (1) permitted a case to be stated.
It was further held that if the Appellate Tribunal improperly or incorrectly made a reference in violation of the provisions of the statute, the High Court was capable of entertaining an objection to the statement of the case and that, if it camp to the 471 conclusion that the case should not have been stated, the High Court was not compelled to express an opinion upon the question referred.
in the case before us there is no question that the present application was not made within time, but the contention is that section 66 (1) only contemplates an application for a reference of a question of law arising out of " such order" which clearly means an order made under section 33 (4), _and, therefore, if there is no valid order under that section no question of law can be said to arise out of "such order" and consequently the Appellate Tribunal can have on jurisdiction to make any reference to the High Court under section 66(1).
Section 66 (2) provides that if on any application being made under sub section (1) the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner may, within the time specified therein, apply to the High Court and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it.
The jurisdiction given to the High Court under this sub section is conditional on an application under sub section (1) being refused by the Appellate Tribunal.
This clearly presupposes that the application under sub section (1) was otherwise a valid application.
If, therefore, an application under sub section (1) was not well founded in that there was no order which could properly be said to be an order under sub section (4) of section 33 then the refusal of the Appellate Tribunal to state a case on such misconceived application on the ground that no question of law arises will not authorise the High Court, on an application under sub section (2) of section 66, to direct the Tribunal to state a case.
The jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under section 33 (4) and a question of law arising out of such an order.
The only question for our consideration, therefore, is whether in this case any question 472 of law arose out of an order which can properly be said to have been made by the Appellate Tribunal under sub section (4) of section 33, for if it did not, then the Appellate Tribunal would have no jurisdiction under sub section (1) of section 66 to refer a case, nor would the High Court have jurisdiction under sub section (2) of that section to direct the Tribunal to do so.
It was at one stage suggested by the learned AttorneyGeneral that we should in the first instance remit the matter to the High Court for their decision on this question but as the question is one of law depending on the construction of the relevant sections of the Act it will save time if it is decided by us here and now.
It is not disputed that we have the power, on the hearing of this appeal, to decide this question.
It will be recalled that when on 19th November, 1945, the Appellate Assistant Commissioner declined to admit the appeal, the assessee did not prefer any appeal but only made a miscellaneous application before the Appellate Tribunal.
There is no provision in the Act permitting such an application.
Indeed, in the statement of the case the Appellate Tribunal states that in entertaining that application and correcting theerror of the Income tax Officer it acted in exercise ofwhat it regarded as its inherent powers.
There being no appeal under section 33 (1) and the order having been made in exercise of its supposed inherent jurisdiction.
, the order cannot possibly be regarded as one under section 33 (4) and there being no order under section 33 (4) there could be no reference under section 66 (1) or (2) and the appellate Court properly refused to entertain it.
The learned Attorney General submits that this Court should not take such a narrow and technical view but should treat that miscellaneous application as really an appeal under section 33.
Turning now to section 33 we find that any assessee objecting to an order passed by an Appellate Assistant Commissioner under section 28 or section 31 may appeal to the Appellate Tribunal within the time specified in 478 sub section (1) which time, however, may be extended by the Tribunal under sub section (2A).
Under sub section (4) the Appellate Tribunal is given power, after giving both parties to.
the appeal an opportunity to be heard, to pass such order thereon as it thinks fit.
It is thus clear that the Appellate Tribunal can make an order under section 33 (4) only on an appeal from an order passed by the Appellate Assistant Commissioner under section 28 or section 31.
If, therefore, there is no order which may properly be said to have been made by the Appellate Assistant Commissioner under section 28 or section 31 then there can be no appeal under section 33 (1) and consequently there can be no order under section 33 (4).
Section 28 is not relevant for our present purpose.
Section 30 provides for filing of appeals against assessments made under the Act.
Sub section (1) of that section prescribes the different decisions against which an appeal will lie.
Sub section (2) prescribes the time within which the appeal is to be filed.
Subsection (3) prescribes the form in which the appeal is to be made.
Then comes section 31 which gives power to the Appellate Assistant Commissioner to hear and dispose of such appeal.
Sub section (3) of section 31 empowers the Appellate Assistant Commissioner in disposing of an appeal under section 30 to make one or other order under one or other of the several clauses of that ' sub section.
It is, therefore, clear that in order that the Appellate Assistant Commissioner may exercise his jurisdiction and make an order under section 3 1, there must be an appeal as contemplated by section 30.
The learned AttorneyGeneral only relies on the opening part of sub section (1) of section 30 and contends that the appeal before the Appellate Assistant Commissioner was with respect to the amount of income assessed under section 23 or section 27.
It will be recalled that the Appellate Tribunal held that the two sums claimed by the assessee would be allowed to him and concluded by saying that the appeal was partly allowed.
The power of the Appellate Tribunal under section 33(4) 474 is indeed wide, for on an appeal properly before it, it can make such order as it thinks fit.
Therefore, it be order made by the Appellate Tribunal in this case on August 20, 1943, must be read and construed as a direction to the Income tax Officer to carry out the directions by allowing the two deductions in question.
When the matter again came before the Income tax Officer his function was only to carry out the order of the Appellate Tribunal.
He could not otherwise reopen the assessment already made by him under section 23.
Therefore, in carrying out the directions of the Tribunal and in doing what be aid on September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and that being the position no appeal lay from that order of the Income tax Officer under section 30 (1) of the Act, I The result of it was that there was no proper appeal before the Appellate Assistant Commissioner such as is contemplated by section 30 (1) and, therefore, the order made by the Appellate Assistant Commissioner cannot be regarded as an order made by him under section 31 (3), for an order under section 31 (3) can only be made in disposing of an appeal properly ' filed under section 30, and consequently no further appeal lay to the Appellate Tribunal under section, 33 (1) so as to enable the Appellate Tribunal to make an order under sub section (4) of that section.
In the premises, there being no order which may properly be said to have been made under section 33 (4), no question of law can be said to arise out of an order made under section 33 (4) and consequently there can be no valid reference under section 66, subsection (1) or sub section (2).
If, therefore, the reference was incompetent for want of jurisdiction both under section 66 (1) or section 66 (2) surely the High Court could decline to entertain it as it did.
Even if the order dated September 26, 1945, made by the Income tax Officer after the matter came back to him to give effect to the decisions of the Appellate Tribunal be regarded as an order made by him under 475 section 23 or section 27 and as such appealable under section 30 (1) then the order made by the Appellate Assistant Commissioner on November 19, 1946, declining to admit the appeal clearly amounted to a refusal on his part to exercise the jurisdiction vested in him by law.
An order thus founded on an error as to his jurisdiction way conceivably be corrected by appropriate proceedings but it cannot certainly be regarded as such an order as is contem plated by any of the sub sections of section 31.
Such an order not coming within the purview of section 28 or section 31, no, appeal lay therefrom to the Appellate Tribunal under section 33 (1) and if no such appeal properly came before the Appellate Tribunal it could not properly make an order under section 33 (4) and if there was no order under section 33 (4) there could be no reference under section 66, sub section (1) or sub section (2).
It follows, therefore, that the order of the Appellate Tribunal correcting the order of the Income tax Officer directing that the sum of Rs. 13,541 should not be included in the assessment cannot be regarded as an order passed by the Appellate Tribunal under section 33 (4) so as to attract the operation of section 66.
The learned Attorney General urged that having under section 66 (2) of the Act directed the Appellate Tribunal to state a case the High Court could not afterwards refuse to answer the question thus referred to it.
Whether the High Court was so precluded or not requires no decision on this occa sion, for even conceding but ;not deciding that the High Court was so precluded, this Court, at any rate, can surely entertain the question of the competency of the reference.
The result, therefore, is that we dismiss these appeals with costs.
Appeals dismissed.
| By an order dated August 20, 1943, the Appellate Tribunal directed that certain deductions claimed by the assessee should be allowed.
The matter came back to the Income tax Officer and he made an order on September 26, 1945, but did not issue any fresh notice of demand.
The assessee appealed to the Appellate Assistant Commissioner complaining that in his order of September 26, the Income tax Officer had wrongly included a sum of Rs. 13,000 60 464 as unassessed foreign income of earlier years.
The Appellate Assistant Commissioner held that the order of September 26 was not appealable.
The assessee, therefore, made a miscellaneous application to the Appellate Tribunal, which held that the Incometax Officer acted wrongly in including the sum of Rs. 13,000 at that stage and directed the Income tax Officer to revise his computation accordingly.
The Commissioner of Income tax, being of opinion that the Appellate Tribunal had no jurisdiction to entertain or make such order on a miscellaneous application applied for a reference to the High Court under section 66 (1) of the Income tax Act.
The Tribunal referred certain questions and the High Court directed the Tribunal to refer certain other questions also but when the references came on for bearing the High Court held that the references were incompetent.
The Commissioner of Incometax appealed to the Supreme Court with the leave of the High Court : Held, (i) that in carrying out the directions of the Tribunal and in passing the order of September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and no appeal lay from his order under section 30 (1).
The order made by the Appellate Assistant Commissioner was not therefore an order under a. 31 (3) and no further appeal lay to the Appellate Tribunal under section 33 (1) so as to enable the Tribunal to make an order under section 33 (4) and us there was no order under a. 33 (4), no question of law can be said to arise out of an order under section 33 (4) and there can be no valid reference under section 66 (1) or section 66 (2); (ii) even assuming that the order of the Income tax Officer dated September 26, 1945, was an order under a. 23 or section 27 and as such appealable, the order made by the Appellate Assistant Commissioner declining to entertain the appeal was not an order under any of the sub sections of a. 31 and no appeal lay therefrom to the Appellate Tribunal under section 33 (1) and there could be no order of the Appellate Tribunal under section 34 (1).
The order of the Appellate Tribunal correcting the order of the Income tax Officer and directing that the sum of Rs. 13,541 should not be included cannot be regarded in any event as an order under section 33 (4) so as to attract the operation of section 66 (1) or (2).
|
Appeal No. 105 of 1952.
Appeal from the Judgment and Decree dated the 16th September, 1949, of the High Court of Judicature at Madras (Subba Rao and Chandra Reddi JJ.) in Appeal No. 162 of 1946 arising out of Judgment and Decree dated the 30th November 1945 of the Court of the Subordinate Judge of Tanjore in Original Suit No. 34 of 1945.
section Ramachandra Iyer, for the appellant.
T. R. Srinivasan, for the respondents.
February 27.
The Judgment of the Court was delivered by MAHAJAN J.
One Thangathammal who was a dasi (dancing girl) lived in the Tanjore district in Madras State and died possessed of some properties.
She left her surviving three daughters, Saraswathi, Jagadambal and Meenambal.
Jagadambal filed the suit out of which 941 this appeal arises against her sisters for partition of the movable and immovable properties set out in the plaint and for allotment of a third share to her therein.
She alleged that her mother was married to one Thyagaraja Pillai, that the properties in suit were the stridhanam properties of her mother who died intestate on 26th July, 1943, and that according to the law or custom of the community to which the parties belonged she and her sisters were entitled to share equally the properties of her mother.
Saraswathi Ammal, the 1st defendant contested the suit.
She pleaded that her mother was not a married woman but a dasi who followed her hereditary occupation and was attached to Shri Saranatha Perumal temple at Tiruchurai in the Tanjore district, that of the three daughters the plaintiff and the 2nd defendant married and lived with their husbands, while she (1st defendant) was duly initiated as a dasi in the said temple and remained unmarried and that according to the law and custom of the community, the mother 's property devolved solely on her to the exclusion of the plaintiff and the 2nd defendant.
The 2nd defendant supported the 1st defendant 's case.
The material issue in the suit was issue No. 1 which was in these terms: " Who is the proper heir of Thangathammal.
Whether according to custom as set tip by the plaintiff, all the daughters are heirs, or according to the custom put forward by the 1st defendant, the unmarried daughters alone are entitled to inherit." The Subordinate Judge dismissed the suit holding that Thangathammal was a dasi and not a married woman, that according to the custom of the dasi community in South India, a dasi daughter is regarded as a nearer heir to the mother than a married daughter and that the 1st defendant was entitled to remain in possession of the suit properties.
Against this decision an appeal was taken to the High Court.
The High Court reversed the decree of the Subordinate Judge and held that the custom pleaded by the 1st defendant 942 was not proved and that the rule of propinquity of Hindu law as a rule of justice, equity and good conscience, governed the succession and the married and dasi daughters were equally entitled to the inheritance.
It was further held that a dasi daughter was not in the status of a maiden or unmarried daughter for purposes of succession to stridhanam property.
Leave to appeal to the Supreme Court was granted under article 133 of the Constitution.
After bearing the learned counsel for the appellant, we feel no hesitation in concurring with the decision of the High Court.
It was contended that the High Court was in error in holding that the custom set up by the defendant was not proved.
To prove the custom that a dasi daughter was a preferential heir and excluded her married sisters reliance was placed on, the evidence of some members of the community and reference was also made to certain instancese same kind of evidence was led by the plaintiff support of her case.
The evidence of both the parties on the the issue of custom is of an unsatisfactory and inconclusive character and from it no inference can be drawn of the existence of a uniform, certain and ancient custom prevailing in the community on this point.
Out of the defendant 's witnesses, the first witness, Rajagopal Pillai, deposed that his wife was the daughter of dasi Kamakshi who had six daughters of whom three were married and three were dasis, that on Kamakshi 's death, her dasi daughters alone would take the inheritance and that his wife, would be excluded.
This statement does not hurt him in any way as his wife will not be bound by what be might state.
His bald assertion about the custom in the community is not of much value.
He does not disclose any source of his information.
In cross examination he admitted that he did not know a single specific instance where such a custom was enforced .
The second witness on the point is the first defendant.
She stated that one Tulasi 's sister Mangalam got no share in her mother Ammani 's properties.
In cross examination it was admitted that Mangalam died about fort years ago, 943 i.e., some time before the defendant was born.
She could therefore have no personal knowledge about Ammani 's instance.
No written record of that inheritance is forthcoming.
Mangalams son Govindaswami Pillai appeared as D. W. 3.
He deposed that Mangalam 's mother Ammani had divided her properties between her dasi daughters in her lifetime.
The instance therefore is not an instance concerning succession and cannot be treated as relevant in this enquiry.
The 1st defendant further deposed to an instance in Srirangam when succession opened out on the death of dasi Chellappa.
It was said that her property was taken by her dasi daughter Visalakshi to the exclusion of her married daughters Marakatham and Rukmini and that the assets were worth a lakh of rupees.
One would have expected some written documents about that sucession if it took place in the manner deposed to.
In the absence of any evidence from the descendants of Chellappa and in the absence of any documentary evidence regarding that succession it is difficult to place any reliance on this so called instance.
Defendant No. I stated that her knowledge of it was only from hearsay, and the requirements of section 32 of the Evidence Act not being fulfilled, her evidence on this point cannot be treated as admissible.
The third witness, about whom reference has already been made, apart from deposing as to Mangalam 's instance also deposed about the instance of dasi Meenakshi.
Her daughter Jeevaratnam is married to the witness.
He said that Meenakshi 's dasi daughters inherited her property and that his wife was excluded.
The only property alleged to belong to Meenakshi was a house, the value of which is not known.
The succession is said to have occurred over twenty years ago.
None of the daughters of Meenakshi have been examined as witnesses in the case, to enable the court to find out the details about it and merely on the statement of this witness the instance cannot be held proved.
The fourth witness for the defendant is her non contesting sister.
She said nothing on the on the question of custom.
She, however, stated 944 that she was not entitled to a share in the assets of her mother.
When asked why she was making that statement, she said that she was saying so because her husband and some.
elders (whose names were.
not disclosed) had told her so.
Evidence of this character on the question of custom cannot be seriously considered.
Venugopal Pillai is the fifth,witness for the defendant.
He is the husband of the second defendant.
His evidence regarding the instance of Chellappa is purely, hearsay.
He deposed that he had learnt that a dasi 's married daughter is not entitled to claim a share as she is not her heir in the presence of a dasi daughter and therfore he told his wife not to claim a share.
He did not disclose the source of his information.
Janaki Ammal, the sixth witness, is a dasi.
She deposed that she has five daughters of whom two are married, one is a dasi and the other two are young girls and that according to their caste custom her properties on her death would devolve on her dasi daughters and that the married daughters must remain content with the presents given at their marriage.
In cross examination she admitted that she was deposing about the caste custom not from any specific instance in which the custom was observed but at the request of the defendant, and that she bad heard of this custom from her elders whose names she did not disclose.
She further admitted that she had an uncle living but she did not even ask him about the custom.
The witness, it appears, knows nothing about the custom and is giving evidence in order to oblige the defendant.
The next witness 'Who gave evidence on the issue is D. W. 8, Kamalathammal, a dasi.
Her mother was also a dasi.
She deposed that her mother 's properties were divided between her and her other dasi sister and Amba, her third sister, who was married, was not given a share.
In cross examination she admitted that Amba never asked for a share.
Neither was Amba produced, nor any written munici pal records showing that the witness actually inherited the property of her mother to the exclusion of Amba.
It is difficult to hold this incident proved merely on the 945 vague testimony of this witness.
Pappathi Ammal, the next witness in the case, is also a dasi.
She deposed that her father 's mother 's property devolved on her two dasi daughters on her death and that there was no married daughter in existence.
This evidence is of a neutral character and is not of much use on the question of custom pleaded in the case.
Apart from asserting that in this community dasi 's property devolves on her death only on the dasi daughters to the exclusion of married daughters, she cited the instance of Chellappa, a dasi of Srirangam.
It was elicited in cross examination that Chellappa left a house and landed properties.
No explanation is forthcoming why documentary evidence of revenue records about this instance has been withheld.
Oral evidences as to instances which can be proved by documentary evidence cannot safely be relied upon to establish custom, when no satisfactory explanation for withholding the best kind of evidence is given.
The last witness in the case is Rajamani Ammal, another dasi who does service in Sri Ranganathaswami temple.
She also referred to the instance of Chellappa.
She said that her jewels which were worth Rs. 1,000 would pass on her death to her dasi daughter.
She went to the length of saying that if a dasi leaves an only child who is a married woman, even then her properties will pass to a next heir such as a cousin and not a married daughter.
This is all the evidence led by the defendant to prove custom.
On this meagre and unsatisfactory material we cannot hold that the custom pleaded is proved.
The opinion evidence is not of a convincing character and evidence as to specific instances in support of the custom is really nil.
Our attention was also drawn to a decision of the Madras High Court in Shanmugathammal vs Gomathi Ammal(l) In that case the plaintiff, a member of the dasi community, claimed to succeed to her deceased maternal aunt and pleaded that the three surviving sisters of the deceased who were impleded as defendants were not entitled to inherit because one of them (1) 122 946 had been adopted by another dancing girl and the other two had become married.
The issue raised in the case was whether the custom set up by the plaintiff that among dancing women married women are excluded by a woman who continues to be ' a dasi is true, valid and enforceable.
Certain dasis gave evidence in support of the custom.
No evidence whatever was given to the contrary and the custom pleaded was held proved in the circumstances of that case.
Emphasis was laid on the circumstance that there was no evi dence whatsoever against the plaintiff and defendants 2 and 3 who denied the existence of the custom in their written statements did not venture to deny it on oath in the witness box.
The dasi community concerned in that case was a small one consisting originally of twenty houses of which only seven or eight were then in existence and in that situation it was said that the custom might well be one that was well recognized and so much a part of the consciousness of the community, that any dispute like the present dispute amongst so small a body of women would be an extremely rare occurrence and therefore impossible of proof and that the plaintiff could not reasonably be expected to search the presidency for witnesses to speak to some similar dispute in other places.
In our opinion, that decision does not furnish a good judicial instance in respect of the custom pleaded in the present case.
There is no evidence that the customs of that small community of dasis are applicable to the community of dasis in the present case which form a considerable community in this district.
Moreover, the case was decided on the peculiar circumstances of that case on very meagre materials and did not lay down any general custom of dasis on this point.
It is unnecessary to examine the plaintiff 's evidence in detail.
Suffice it to say that it is more than sufficient to rebut the evidence led by the defendant and it neutralizes its effect, if any.
In the absence of proof of existence of a custom governing succession the decision of the case has to rest on the rules of justice, equity and good conscience because admittedly no 947 clear text of Hindu law applies to such a case.
The High Court thought that the just rule to apply was one of propinquity to the case, according to which the married and dasi daughters would take the mother 's property in equal shares.
No exception can be taken to this finding given by the High Court.
No other rule was suggested to us leading to a contrary result.
It was argued that the dasis have a distinct status in Hindu society and, that a rule has been evolved by judicial decisions under which the state of degradation by itself furnishes a rule of preference in a competition between dasi daughters and married daughters.
The juidicial decisions referred to concern the community of prostitutes and the rule evolved concerning them has been abrogated by later decisions.
It was contended that though the said rule had been abrogated and was no, longer applicable to that community concerning which it was evolved, it should by analogy be applied to cases of succession to dasis.
Narasanna vs Oangu(1) was the first case cited.
There, an adopted niece of a prostitute dancing girl was preferred to a brother remaining in caste.
It was said that the legal relation between a prostitute dancing girl and her undegraded relations remaining in caste becomes severed and they are therefore not entitled to inherit the estate.
In Subbaratna Mudali vs Balakrishnaswami Naidu(2), the next, case cited, the facts were that a deceased woman Palani inherited the property in dispute from her mother Nagu, who inherited it from her mother Mottai who again inherited it from her father Arunachalam.
Arunachalam had two brothers Ramaswami and Mathurbutham and the question in that case was whether Mathurbutham 's daughter Seethai or Ramaswami 's daughter 's son Marudamuthu Mudali was the heir of Palani.
The learned judges held that Mathurbutham 's daughter was preferential heir to Ramaswami 's daughter 's son.
It was pointed out that the rule of preference based on degradation was no longer good law.
It was, however, (1) I.L.R. (2) 33 M.L.J. 207.
948 added that in cases of dancing girls the law remained as it was before.
Our attention was also drawn to certain observations in Subbaraya Pillai vs Ramaswami Pillai(1) at page 177, and to the decision in Balasundaram vs Kamakshi Ammal(2).
In the former case the learned Judges rejected the broad proposition that Degradation of a woman in consequence of her unchastity entails in the eye of the law cessation of the tie of kindred between her and the members of her natural family and also between her and the members of her husband 's family.
We think that decision on this point is sound in law.
Degradation of a woman does not and cannot sever the ties of blood and succession is more often than not determined by ties of blood than by the moral character of the heir.
In Balasundaram vs Kamakshi Ammal(2) it was held that the property acquired by the mother had been acquired by her as a married woman and notwithstanding her lapse into unchastity, it devolved on her daughters clothed with the ordinary character of property acquired by a Hindu female, that is to say, the daughters took a life estate in it.
The learned counsel attempted to persuade us to hold the custom pleaded proved by the assistance of decisions given in analogous cases and by applying the principles of the rules said to have been, enunciated in some of them.
Those cases were decided on their own facts and in some of them a rule was enunciated that degraded people are a class by themselves and their degraded relations are preferential heirs to the undegraded ones.
As already said, we cannot subscribe to the view that any such rule can be evolved merely on logical grounds.
Its existence can only be justified on the basis of established custom.
No trustworthy evidence has been led in this case to establish that the daughters of a dasi by marriage lose their right of inheritance and form a separate community.
The correct approach to a case where a party seeks to prove a custom is the one pointed out by their Lordships of the (1) I.L.R. (2) 949 Privy Council in Abdul Hussein Khan vs Soma Dero(1).
It was there said that it is incumbent on a party setting up a custom to allege and prove the custom on which he relies and it is not any theory of custom or deductions from other customs which can be made a rule of decision but only any custom applicable to the parties concerned that can be the rule of decision in a particular case.
It is well settled that custom cannot be extended by analogy.
It must be estabished inductively, not deductively and it cannot be established by a priori methods.
Theory and custom are antitheses, custom cannot be a matter of mere theory but must always be a matter of fact and one custom cannot be deduced from another.
A community living in one particular district may have evolved a particular custom but from that it does not follow that the community living in another district is necessarily following the same custom.
The last point taken by the learned counsel was that under Hindu law the 1st defendant as a maiden was entitled to preference over her married sisters.
Defendant No. I was admittedly married to the idol and she has been on her own show.
living a life of prostitution.
The text of the Mitakshara dealing with the case of a virgin can.
not be applied to her case.
[Vide Tara vs Krishna(1)].
It is inconceivable that when the sages laid down the principle of preference concerning unmarried daughters they would have intended to include a prostitute within the ambit of that text.
For the reasons given above we see no force in this appeal and it is dismissed with costs.
Appeal dismissed, Agent for appellant: section Subramaniam.
Agent for respondent No. I : M. section K. Aiyangar.
| The evidence on record did not establish the custom which had been pleaded, namely that among the community of dasis 940 (dancing girls) in South India a dasi daughter succeeded to her mother in preference to the married daughters; and in the absence of such custom, succession to a dasi must be governed by the rule of propinquity of Hindu law as a rule of justice, equity and good conscience and dasi daughters and married daughters would succeed to their mother 's property in equal shares.
A rule that degraded relations are preferential heirs to undegraded ones cannot be evolved merely on logical grounds the existence of such a rule can only be justified on the basis of established custom.
Custom cannot be extended by analogy.
It must be establish ed inductively, not deductively, and it cannot be established by a priori methods.
It cannot be a matter of mere theory but must always be a matter of fact and one custom cannot be deduced from another.
Shanmugathammal vs Gomathi Ammal , distin guished.
Narasanna vs Gangu (I.L.R. , Subbaratna Madali vs Balakrishna Naidu (33 M.L.J. 207), Subbaraya Pillai vs Ramaswami Pillai (I.L.R. , Balasundaram V. Kamakshi Ammal , and Abdul Husein Khan vs Soma Dero (I.L.R. P.C.) referred to.
The rule of Hindu law by which a maiden is a preferential heir to her married sisters does not apply to daughters who are admittedly married to an idol and lead a life of prostitution.
Tara vs Krishna (I.L.R. referred to.
|
Appeal No. 154 of 1952.
Appeal from the Judgment and Decree dated the 23rd June, 1949, of the High 131 1010 Court of Judicature at Bombay (chagla C. J. and Gajendragadkar J.) in Second Appeal No. 557 of 1945 against the Judgment and Decree dated the 19th March, 1945, of the Court of Small Causes, Poona, in Civil Appeal No. 175 of 1943, arising from the Decree dated the 31st March, 1943, of the Court of the Extra Joint Sub Judge of Poona in Suit No. 858 of 1941.
C. K. Daphtary, Solicitor General for India (J.B. Dadachanji, with him) for the appellant.
V. M. Tarkunde for the respondents.
February 27.
The judgment of the Court was delivered by MAHAJAN J.
This is an appeal by defendant No. I from the decree of the High Court of Judicature at Bombay in Second Appeal No. 557 of 1945, whereby the High Court confirmed the decree of the lower courts granting possession of land to the respondents on the forfeiture of a lease.
The appeal is confined to survey No. 86/2 at Mundhava in Poona district.
The principal question arising for decision in the ap.
peal is whether notice as contemplated by section III (g) of the is necessary for the determination of a lease for non payment of rent even where such lease was executed before the coming into force of the .
The only other question that falls for determination is whether the High Court should have interfered with the discretion of the lower courts in refusing relief against forfeiture in the circumstances of this case.
The present respondents are the daughter and grand sons of the original plaintiff Vinayakbhat.
His adoptive mother was Ramabai.
She owned two inam lands at Mundhava which were then numbered Pratibhandi Nos. 71 and 72.
Present survey Nos.
86/1 and 86/2 together correspond to old Pratibhandi No. 71.
On 1st July, 1863, Ramabai, while she was in financial difficulties, passed a permanent lease of both these numbers to one Ladha Ibrahim Sheth.
The lessee paid a premium of Rs. 999 for the lease, and also agreed to pay 1011 a yearly rent of Rs. 80 to Ramabai during her lifetime and after her death a yearly amount equal to the assessment of the two lands to the heirs of Ramabai.
The lease provided that in default of payment of rent the tenant 's rights would come to an end.
On 18th August, 1870, Ladha Ibrahim sold his tenancy rights to one Girdhari Balaram Lodhi for Rs. 7,999.
The sale deed provided that in default of payment of rent to Ramabai or her heirs, the purchaser would have no rights whatsoever left over the property.
On the same day the purchaser passed a rent note in favour of Ramabai.
The rent note provided for the payment of the agreed rent in the month of Pousb every year, and stated that in case of default the tenant or his heirs would have no right over the land.
Defendant No. 1 and the other defendants are the grandsons of Seth Girdhari Balaram.
In spite of the nullity clause in the lease it appears that the lessee has been more or less a habitual defaulter in the payment of rent.
In the year 1913, rent for six years was in arrears.
Vinayakbhat filed Suit No. 99 of 1913 in the court of the II Class Sub Judge, Poona, against the present defendants for possession of the demised premises on the ground of forfeiture.
A number of defences were raised by them.
Inter alia, it was pleaded that as no notice had been given to them the forfeiture was not enforceable.
These contentions were negatived but the court granted relief against forfeiture.
Defendant No. 1 was a minor at that time and became a major in or about 1925.
In the year 1928 again rent for two years was in arrears.
Vinayakbhat filed Civil Suit No. 258 of 1928 against the present defendants for possession on the ground of forfeiture.
The plaintiff subsequently waived the forfeiture by accepting three years ' rent which by then had fallen in arrears and costs of the suit.
In the year 1931 rent for three years again fell into arrears.
The amount was then sent by money order and the landlord accepted it.
In the year 1934 again rent for three years remained unpaid.
At that time proceedings were started by Government for the acquisition of the old survey No. 72.
1012 The landlord claimed that he was entitled to the whole compensation money as the tenant 's rights had ceased by forfeiture for non payment of rent.
Defendant No. 1 through his pleader sent a notice to Vinayakbhat to come and take the arrears of rent. 'He agreed and accepted the arrears of rent and the forfeiture was again waived.
As a result of this the defendants got Rs. 32,000 by way of compensation for the permanent tenancy rights in old survey No. 72, while Vinayakbhat got Rs. 1,400 for compensation for the acquisition of his rights as landlord in that land.
In 1938 rent for four years was again in arrears.
Vinayakbhat filed Civil Suit No. 982 of 1938 in the court of the I Class Sub Judge at Poona against all the present defendants for possession of survey Nos.
86/1 and 86/2 on the ground that the lease had determined by forfeiture for non payment of rent.
In that suit defendant No. 1 pleaded that there was no forfeiture because no rent was fixed in respect of the suit property and also because it was for the, plaintiff to recover rent and not for the defendants to go to the plaintiff and pay it.
These contentions were negatived.
It was held that forfeiture had occurred but relief against forfeiture was again granted.
On plaintiff 's appeal in this case, the learned District Judge refused to interfere with the discretion of the trial judge in granting relief against forfeiture but observed that the defendants having obtained relief against forfeiture thrice before should not expect to get it for a fourth time if they again make default in the payment of rent.
The default which has given rise to the present suit occurred on 28th January, 1941, and the plaintiff filed the suit out of which this appeal arises for possession on the ground of forfeiture and for the arrears of rent which remained unpaid.
It was alleged in the plaint that the rent due on 28th January, 1941, was not paid, though demanded.
Plaintiff asked for possession of survey Nos. 86/1 and 86/2 after removal of the structures thereon.
Defendant No. 1 pleaded that as a result of partition rights in survey No. 86/2 had fallen to 1013 his share, that according to the terms of the rent note it was for the plaintiff to approach the defendants and.
not for the defendants to go to the plaintiff and pay it, ' ' that as the plaintiff did not approach the defendants and no demand for rent was made, no forfeiture occurred, that defendant No. I did offer the rent to the plaintiff, but the plaintiff fraudulently refused to accept it, that the plaintiff ought to have sent a notice according to law if he wanted to enforce the right of forfeiture and that without prejudice to the above contentions he should be granted relief against forfeiture.
The trial court decreed the plaintiff 's suit and negatived the contentions raised by the defendants.
In awarding Possession of the entire property to the plaintiff the trial court imposed a condition that defendant No. I should continue to be in possession of the two structures in survey No. 86/2 till the end of March, 1950.
On the question whether a notice was necessary before the lease could be terminated, the trial court expressed the view that the provision in the rent note that on non payment of rent the rights of the tenant would come to an end was a clause of nullity and not merely a clause of forfeiture and that the lease was therefore determined under section 111 (b) and not under section III (g) of the and that no notice as required by section 111 (g) was necessary for terminating the lease in suit.
On the issue whether forfeiture should be relieved against, the trial court said that relief could have been given to the lessee against forfeiture under section 1 14 had it not been for the fact that the defendants had disentitled themselves to relief by contumacious conduct on their part, that even this paltry rent had never been paid in time during the last twenty years at any rate, and that after defendant No. I had attained majority and got the estate in his charge in 1922 23 he had uniformly defaulted in the payment of rent and that the defendants raised totally false defences and in every suit a false excuse was set up in an attempt to justify the arrears of rent.
1014 In pursuance of the trial court 's decree plaintiff took possession of all the suit lands in April, 1943, except one acre which he took possession on 13th September, 1943.
Defendant No. I remained in possession of the two structures on survey No. 86/2.
Against the decision of the trial judge defendant No. I alone filed an appeal to the District Judge of Poona.
The lower appellate court confirmed the decree of the trial court with two modifications.
Defendant No. I was allowed to remove the buildings on survey No. 86/2 and also the trees therein within three months.
On the issue whether a notice was necessary, the appellate court found that the lease came to an end not under section 111(b) but under section 111 (g) of the Transfer of Pro perty Act, but that no notice of forfeiture was necessary as the lease had been executed prior to the coming into force of the .
The appellate court saw no valid reason for interfering with the finding of the trial judge on the question concerning relief against forfeiture.
From this appellate decree defendant No. I filed a second appeal to the High Court of Judicature at Bombay.
The plaintiff filed cross objections in regard to the trees and costs.
The High Court dismissed the appeal and allowed the cross objections.
An application was made for leave to appeal to the Supreme Court and it was granted with reference to survey No.
The law with regard to the determination of a lease by forfeiture is contained is section III (g) of the .
Under that provision a lease is determined by forfeiture in case the lessee breaks an express condition which provides that on breach thereof the lessor may re enter, or in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself, or the lessee is adjudicated an insolvent and the lease provides that the lessor may reenter on the happening of such event and a certain further act is done by the lessor as thereinafter mentioned.
Prior to its amendment by Act XX of 1929, this sub section further provided 1015 "And in any of these cases the lessor or his transferee does some act showing his intention to determine the lease.
" By Act XX of 1929, this subsection was amended and the amended sub section now reads: "And in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease.
" Section 111 (g) in terms makes the further act an integral condition of the forfeiture.
In other words, without this act there is no completed forfeiture at all.
Under the old section an overt act evidencing the requisite intention was essential.
As the law stands today under the Act, notice in writing by the landlord is a condition precedent to a forfeiture and the right of re entry.
Section 63 of Act XX of 1929, restricts the operation of this amendment to transfers of property made after 1st April, 1930.
The lease in this case was executed before the came into force in 1882.
The amendment therefore made in this sub section by Act XX of 1929 not being retrospective, cannot touch the present lease and it is also excluded from the reach of the by the provisions of section 2.
The position was not seriously disputed in the High Court or before us that the statutory provisions of section 111(g) as such cannot be made to govern the present lease which was executed in the year 1870.
It was however strongly argued that the amendment made in 1929 to section 111(g) of the Act embodies a principle of justice, equity and good conscience and notwithstanding section 2 of the Act, that principle was applicable in this case and there can be no forfeiture unless notice in writing to the lessee of his intention to determine the lease by the lessor bad been given.
It is axiomatic that the courts must apply the principles of justice, equity and good conscience to transactions which come up before them for determination even though the statutory provisions of the Transfer of 1016 Property Act are not made applicable to these transactions.
It follows therefore that the provisions of the Act which are but a statutory recognition of the rules of justice, equity 'and good conscience also govern those transfers.
If, therefore, we are satisfied that the particular principle to which the legislature has now given effect by the amendment to section 111 (g) did in fact represent a principle of justice, equity and good conscience, undoubtedly the case will have to be decided in accordance with the rule laid down in the section, although in express terms it has not been made applicable to leases executed prior to 1929 or even prior to the coming into force.
The main point for consideration thus is whether the particular provision introduced in sub section (g) of section 111 of the in 1929 is but a statutory recognition of a principle of justice, equity and good conscience, or whether it is merely a procedural and technical rule introduced in the section by the legislature and is not based on any well established principles of equity.
The High Court held, and we think rightly, that this provision in sub section (g) of section III in regard to notice was not based upon any principle of justice, equity and good conscience.
In the first instance it may be observed that it is erroneous to suppose that every provision in the and every amendment effected is necessarily based on principles of justice, equity and good conscience.
It has to be seen in every case whether the particular provisions of the Act relied upon restates a known rule of equity or whether it is merely a new rule laid down by the legislature without reference to any rule of equity and what is the true nature and character of the rule.
Now, so far as section 111 (g) of the Act is concerned, the insistence therein that the notice should be given in writing is intrinsic evidence of the fact that the formality is merely statutory and it cannot trace its origin to any rule of equity.
Equity does not concern itself with mere forms or modes of procedure.
If the purpose of the rule as to notice is to indicate the intention of the lessor to 1017 determine the lease and to avail himself of the tenant 's breach of covenant it could as effectively be achieved by an oral intimation as by a written one without in any way disturbing the mind of a chancery judge.
The requirement as to written notice provided in the section therefore cannot be said to be based on any general rule of equity.
That it is not so is apparent from the circumstance that the requirement of a notice in writing to complete a forfeiture has been dispensed with by the legislature in respect to leases executed before 1st April, 1930.
Those leases are still governed by the unamended sub section (g) of section 1 1 1.
All that was required by that sub section was that the lessor was to show his intention to determine the lease by some act indicating that intention.
The principles of justice, equity and good conscience are not such a variable commodity, that they change and stand altered on a particular date on the mandate of the legislature and that to leases made between 1882 and 1930 the principle of equity applicable is the one contained in sub section (g) as it stood before 1929, and to leases executed after 1st April, 1930, the principle of equity is the one stated in the sub section as it now stands.
Question may also be posed, whether according to English law a notice is a necessary requisite to complete a forfeiture.
The English law on the subject is stated in Foa 's General Law of Landlord and Tenant (7th edition) at page 316 in these terms : " In no case can the lessee take advantage of the proviso for re entry in order to avoid the lease, even where it is in the form (not that the lessor may reenter, but) that the term shall cease, or that the lease shall be void for all purposes, or 'absolutely forfeited '; for expressions of this kind only mean that the tenancy shall determine at the option of the lessor. .
This has been usually expressed by saying that the lease is voidable and not void; but the true principle appears to be that the lease does become void to all intents and purposes, though this is subject to the condition that the party who is seeking to set up its invalidity 132 1018 is not himself in default, for otherwise he would be taking advantage of his own wrong.
It follows that where the proviso makes the lease void, the landlord must, in order to take advantage of it, do some unequivocal act notified to the lessee, indicating his intention to avail himself of the option given to him.
The service upon the lessee in possession of a writ in ejectment is sufficient".
The Law of Property Act, 1925, by section 146 has consolidated the law in England on this subject.
The provision with regard to the giving of notice before a right of re entry accrues to the landlord is expressly excluded by sub section (11) in cases of re entry on forfeiture for non payment of rent.
In England it is not necessary in case of non payment of rent for a landlord to give notice before a forfeiture results.
It cannot, therefore, be said that what has been enacted in sub section (g) of section II 1 is a matter which even today in English law is considered as a matter of justice, equity and good conscience.
In English law the bringing of an action which corresponds to the institution of a suit in India is itself an act which is definitely regarded as evidencing an intention on the part of the lessor to determine a lease with regard to which there has been a breach of covenant entitling the lessor to re enter : vide Toleman vs Portbury and Prakashchandra Das vs Rajendranath Basu(2).
In India there is a substantial body of judicial authority for the proposition that in respect of leases made before the forfeiture is incurred when there is a disclaimer of title or there is non payment of rent.
Any subsequent act of the landlord electing to take advantage of a forfeiture is not a condition precedent to the right of action for ejectment.
The bringing by a landlord of a suit for ejectment is simply a mode of manifesting his election.
The principle of these cases rests upon the ground that the forfeiture is complete when the breach of the condition or the denial of title occurs.
But as it is left to the lessor 's option to take advantage of it or not, the (1) L.R. 6 Q.B. 245.(2) (1931)58 cal.
1019 election is not a condition precedent to the right of action and the institution of the action is a sufficient manifestation of the election.
The same principle is applied for actions for relief on the ground of fraud.
[vide Padmabhaya vs Ranga(1) ; Korapalu vs Narayana(2)].
In Rama Aiyangar vs Guruswami Chetty(3),it was saidthat as the lease was not governed by the , the institution of the suit was a sufficient determination of the lease and no other previous act determining the same such as a notice to quit was necessary for maintaining the action.
The same view was expressed in Venkatachari vs Rangaswami Aiyar(4).
In Venkatarama Aiyar vs Ponnuswami Padayachi(5), it was observed that the forfeiture will not be produced merely by the unilateral act of ceasing to comply with the conditions upon which the property is held, but it must involve also some expression of intention to enforce the forfeiture on the part of the lessor.
In other words, the lessee cannot by his unilateral act terminate the lease, and cannot take advantage of his own wrong.
That is an intelligible principle and is based on a maxim of equity.
But the defaulting lessee cannot claim the benefit of a notice in writing to complete the forfeiture he has incurred.
The lessor has to simply express an intention that he is going to avail of the forfeiture and that can be done by the filing of a suit, as in English law, in all cases not governed by the .
Again in Ramakrishna Mallaya vs Baburaya (6), it was said that in an ejectment suit based on leases executed prior to the , no act on the part of the landlord showing that he elected to take advantage of the forfeiture for non payment of rent was necessary.
The contrary view expressed in Nourang Singh vs Janardan Kishor(7), that the institution of a suit for ejectment could not be regarded as a requisite act to show the intention of a (1) Mad. 161.
(2) Mad.
(3) (4) (1919) 36 M.L.J. 532.
(5) A.I.R. 1935 Mad.
(6) (7) Cal.
469, 1020 landlord to determine a lease within the meaning of section 111 (g), was dissented from in Prakashchandra Das vs Rajendranath Basu(1); and it was said that there is no special reason why the lessor 's election must be made at some time prior to the institution of a suit and that it was difficult to find a raison d 'etr for the view that the cause of action has not completely accrued if the election is made at the moment when the suit is instituted, i.e., the moment the plaint is presented.
The cause of action for the suit can arise simultaneously with the presentation of a plaint.
In our opinion the provision as to notice in writing as a preliminary to a suit for ejectment based on forfeiture of a lease is not based on any principle of justice, equity or good conscience and cannot govern leases made prior to the coming into force of the , or to leases executed prior to 1st April, 1930.
The rights and obligations under those leases have to be determined according to the rules of law prevailing at the time and the only rule applicable seems to be that a tenant cannot by his unilateral act and by his own wrong determine the lease unless the lessor gives an indication by some unequivocal expression of intention on his part of taking advantage of the breach.
On no principle of equity is a tenant entitled to a notice in writing telling him that the lease has been determined.
The High Court was therefore right in the view that it took of the matter and there are no valid reasons for taking a contrary view.
Considerable reliance was placed by Mr. Daphtary on the decision of Chandrasekhara Aiyar J. sitting singly in the case of Umar Pulavar vs Dawood Rowther(2), wherein the learned Judge said that section 111 (g) as amended in 1929 embodied a principle of justice, equity and good conscience and must be held to govern even agricultural leases and where there was a forfeiture by denial of the landlord 's title, a notice in writing determining the lease was necessary.
it was there observed that the principle so embodied (1) Cal.
(2) A.I.R. 1947 Mad.
1021 in the sub section as a result of the amendment becomes, so to say, a principle of justice, equity and.
good conscience.
The learned Judge for this view placed reliance on the decision in Krishna Shetti vs Gilbert Pinto( '), in which it was said that the was framed.
by eminent English lawyers to reproduce the rules of English law, in so far as they are of general.
application and rest on principle as well as authority and its provisions are binding on us as rules of justice, equity and good conscience.
With respect, we are constrained to observe that this is too broad a statement to make.
It seems that the attention of the learned judges was not drawn to the fact that the provision as to notice for determining a lease for nonpayment of rent was not a part of the English law.
It also does not seem to have been fully appreciated that the rule enunciated in sub section (g) of section 111 prior to its amendment in 1929 and which still governs leases executed before 1st April, 1930, OD the reasoning of the decision would also be a rule of justice, equity and good conscience and according to it the institution of a suit for ejectment would be sufficient indication on the part of the landlord for determination of the lease and a notice in writing as required by the amended section would not be a prerequisite for institution of such a suit.
In our judg ment, this case was wrongly decided and we are unable to support it.
As pointed out by Napier J. in Krishna Shetti vs Gilbert Pinto (1), the courts should be very careful in applying statutory provisions and the assistance of the as a guide on matters which have been excluded from the purview of the Act by express words should not be invoked, unless the provisions of the Act embody principles of general application.
Mr. Daplitary also placed reliance on certain observations contained in the Full Bench decision Brahmayya vs Sundaramma (1).
There it was said that although section 106 of the does not (1) Mad.
(2) A.I.R. 1948 Mad.
1022 apply to leases for agricultural purpose by virtue of section 117 of the Act, nevertheless the rules in section 106 and in the other sections (sections 105 to 11 6) in Chapter V of the Act are founded upon reason and equity and they are the principles or English law and should be adopted as the statement of the law in India applicable also to agricultural leases.
In our opinion, the above statement is again formulated in too wide a language.
Section 105 gives a statutory definition of the word "lease".
It enunciates no principle of equity.
The relation of lessor and lessee is one of contract and in Bacon 's Abridgement a lease is defined as a contract between the lessor and the lessee for the possession and profits of land on the one side and recompense by rent or other consideration on the other.
The statute has given a more comprehensive definition of the term.
Section 107 makes registration of a lease compulsory.
This section again does not concern itself with any princi ple of justice or equity.
Section 108 (j) enacts that the lessee may transfer absolutely by way of mortgage or sublease the whole or any part of his interest in the property and any transferee of such interest or part may again transfer it.
The law in India and England on this subject is not the same and it cannot be said that this sub section enacts or enunciates any general principle of equity.
Parts of sections 109, 1 10 and Ill contain mere rules of procedure or rules of a technical nature.
These certainly cannot be said to be based on any principles of equity.
In our judgment, therefore, the statement in this decision that sections 105 to 116 of the are founded upon principles of reason and equity cannot be accepted either as correct or precise.
Of course, to the extent that those sections of the Act give statutory recognition to principles of justice, equity and good conscience they are applicable also to cases not governed by the Act.
Reference was also made to the decision of the Bombay High Court in Tatya Savla Sudrik vs Yeshwanta Kondiba Mulay (1) where it was said that the (1) 1023 principle embodied in section 111 (g) of the that in the case of forfeiture by denial of landlord 's title a notice in writing determining them lease must be given is a principle of justice, equity and good conscience which must be held to govern even agricultural leases.
In that case it was contended that following upon forfeiture which had been incurred a suit was filed by the plaintiffs in eviction and nothing more needed to be done by the plaintiffs.
For this contention reliance was placed on two earlier decisions of the Bombay High Court, Venkaji Krishna Nadkarni vs Lakshman Devji Kandar (1) and Vidyavardhak Sang Co. vs Avvappa (2).
This contention was negatived in view of the decision of Chandrasekhara Aiyar J. above referred to, and also in view of a binding decision of a Division Bench of that court in Mahiboobkhan Muradkhan vs Ghanashyam Jamnaji(3).
The learned Chief Justice in the judgment under appeal has explained the distinction between the present case and that case and has not followed his own earlier decision in arriving at his conclusions here.
With respect we think that that decision did not state the law on the point correctly.
Under English law the institution of a suit for ejectment has always been considered an unequivocal act on the part of the landlord for taking advantage of the default of the tenant and for enforcing the forfeiture in case of non payment of rent, and even in other cases except where statutory provisions were made to the contrary.
Reference was also made to the observations of their Lordships of the Privy Council in Aditya Prasad vs Ramratan Lal (1).
Their Lordships dealing with the question whether a certain document created a charge upon a village observed that the appellant could not redeem it without paying both the mortgage debt and the amount subsequently raised and it was said that the provisions of the on the point were identical with the principles of justice, equity and good conscience.
The observation made in that case must be limited to that case and cannot be (1) Bom, 354 F.B. (2) (3) Unreported.
(4) (1930) 57 I.A. 173.
1024 held as applicable to all cases irrespective of the nature of the provisions involved.
Similar observations are contained in another decision of their Lordships of the Privy Council in Muhammad Raza vs Abbas Bandi Bibi (1), which concerned the provisions of section 10 of the which recognizes the validity of a partial restriction upon a power of disposition in the case of a transfer inter vivos.
It was held that there was no authority that a different principle applied in India before the Act was passed and that under English law a partial restriction was ' not repugnant even in the case of a testamentary gift.
Lastly, Mr. Daphtary drew our attention to the decision in Roberts vs Davey(2), which relates to a licence.
There it was observed that it was necessary for the licensor to have done some act showing his intention to determine the licence and until such act was shown, it continued in force.
Littledale J. in this case said that the instrument was "a mere licence to dig, and did not pass the land.
An actual entry, therefore, was unnecessary to avoid it; but by analogy to what is required to be done in order to determine a freehold lease which, by the terms of it, is to be void on the non performance of covenants, it seems to follow that, to put an end to this licence, the grantor should have given notice of his intention so to do".
The basis of the decision was that some act amounting to an exercise of the option had to be proved before the licence was determined.
This decision therefore does not in any way affect the decision of the High Court in this case.
On the question whether the tenant should have been given relief against forfeiture the High Court held that the matter was one of discretion and both the lower courts had exercised their discretion against the appellant and that being so, unless they were satisfied that the discretion was not judicially exercised or was exercised without proper materials they would not ordinarily interfere with it in second appeal.
It was said that the non payment in this case seems to have (1) (1932) 59 I.A. 236.
(2) ; 1025 become chronic and that this was not a case for the exercise of equitable jurisdiction.
Mr. Daphtary contended that the High Court failed to appreciate the rule applicable for the exercise of the discretion in such cases and that the rule is that if at the time relief is asked for the position has been altered so that relief cannot be given without causing injury to third parties relief will be refused, but if that position is not altered so that no injustice will be done there is no real discretion and the court should make the order and give the relief.
Reference was made to the decision of Page J. in Debendralal Khan vs F. M. A. Cohen (1), wherein it was said that the court normally would grant relief against forfeiture for non payment of rent under section 114 of the and that if the sun) required under the section was paid or tendered to the lessor at the hearing of the suit the court has no discretion.
in the matter and must grant relief to the tenant.
We do not think that the learned Judges intended to lay down any hard and fast rule.
Indeed the learned Judge proceeded to observe as follows: "In exercising the discretion with which it is invested under section 114 a court in India is not bound by the practice of a court of Chancery in England, and I am not disposed to limit the discretion that it possesses, Those who seek equity must do equity, and I do not think merely because a tenant complies with the conditions laid down in section 114 that he becomes entitled as of right to relief" In our opinion, in exercising the discretion, each case must be judged by itself, the delay, the conduct of the parties and the difficulties to which the landlord. has been put should be weighed against the tenant, This was the view taken by the Madras High Court in Appaya Shetty vs Mohammad Beari (2) , and the matter was discussed at some length.
We agree with the ratio of that decision.
It is a maxim of equity that a person (1) Cal. 485.
(2) Mad.
133 1026 who comes in equity must do equity and must come with clean hands and if the conduct of the tenant is such that it disentitles him to relief in equity, then the court 's hands are not tied to exercise it in his favour.
Reference in this connection may also be made to Ramakrishna Mallya vs Baburaya(1), and Ramabrahmam vs Rami Reddi (2).
The argument of Mr. Daphtary that there was no real discretion in the court and relief could not be refused except in cases where third party interests intervene is completely negatived by the decision of the House of Lords in Hyman vs Rose (3).
Relief was claimed in that case under the provisions of section 14(2) of the Conveyancing Act, 1881, against forfeiture for breaches of covenant in the lease.
The appellants offered as the terms on which relief should be granted to deposit a sum sufficient to ensure the restoration of the premises to their former condition at the end of the term and make full restitution.
It was argued that the matter was one of discretion and the court should lean to relieve a tenant against forfeiture and if full recompense can be made to the landlord the relief should be granted.
Lord Loreburn in delivering the opinion of the House observed as follows: "I desire in the first instance to point out that the discretion given by the section is very wide.
The court is to consider all the circumstances and the conduct of the parties.
Now it seems to me that when the Act is so express to provide a wide discretion, meaning, no doubt, to prevent one man from forfeiting what in fair dealing belongs to some one else, by taking advantage of a breach from which he is not commensurately and irreparably damaged, it is not advisable to lay down any rigid rules for guiding that discretion.
I do not doubt that the rules enunciated by the Master of the Rolls in the present case are useful maxims in general, and that in general they reflect the point of view from which judges would regard (1) (2) A.I.R. 1928 Mad. 250.
(3) 1027 an application for relief.
But I think it ought to be distinctly understood that there may be cases in which any or all of them may be disregarded.
If it were otherwise the free discretion given by the statute would be fettered by limitations which have nowhere been enacted.
It is one thing to decide what is the true meaning of the language contained in an Act of Parliament.
It is quite a different thing to place conditions upon a free discretion entrusted by statute to the court where the conditions are not based upon statutory enactment at all.
It is not safe, I think, to say that the court must and will always insist upon certain things when the Act does not require them, and the facts of some unforeseen case may make the court wish it had kept a free hand.
" With great respect we think that the observations cited above contain sound principles of law.
We are, therefore, unable to accede to the contention of Mr. Daphtary that though section 114 of the confers a discretion on the court, that discretion except in cases where third party interests intervene must always be exercised in favour of the tenant irrespective of the conduct of the tenant.
It is clear that in this case the tenant is a recalcitrant tenant and is a habitual defaulter.
For the best part of 25 years he has never paid rent without being sued in court.
Rent has been in arrears at times for six years, at other times for three years and at other times for four years and so on, and every time the landlord had to file a suit in ejectment which was always resisted on false defences.
No rule of equity, justice or good conscience can be invoked in the case of a tenant of this description.
He cannot always be allowed to take advantage of his own wrong and to plead relief against forfeiture on every occasion, particularly when he was warned by the court of appeal on a previous occasion.
He had already had relief three times on equitable grounds and it is time that the court withheld its hands and ordered his ejectment.
In this situation the High Court was fully justified in finding that in second appeal it would not interfere with the 1028 discretion of the courts below in refusing to, grant relief against forfeiture.
The result therefore is that this appeal fails is dismissed with costs.
Appeal dismissed.
Agent for appellant: R.A. Govind.
Agent for respondents: Rajinder Narain.
| The provision as to notice in writing of the lessor 's intention to determine the lease, container in section 111(g) of the , as amended in 1929, is not based on any principle of justice, equity or good conscience and is not applicable to leases executed prior to 1st April, 1930.
Where a lease deed executed before the , came into force, provided that the lessee 's rights should come to an end on default of payment of rent, and, as rent was not duly paid, the lessor instituted a suit for ejectment of the lessee without giving him a notice in writing of his (the lessor 's) intention to determine the lease : Held, that the suit was maintainable.
Umar Pulavar vs Dawood Rowther (A.1,R. , Brahmayya vs Sundodaramma (A.I.R. , Tatya Savla Sudrik vs Yeshwanta Kondiba Mulay disapproved.
Toleman vs Portbury (L.R. 6 Q.B. 245), Prakash Chandra Das vs Rajendra Nath Basu (I.L.R. , Rama Aiyangar vs Guruswami Chetty , Venkatachari vs Rangaswami Aiyar (36 M.L.J. 532) and Krishna Shetti vs Gilbert Pinto (I.L.R. relied on.
Venkatarama Aiyar vs Ponnuswamy Padayachi (A.I.R. 1935 Mad. 918), Aditya Prasad vs Ram Ratanlal (57 I A. 173), Muhammad Raza vs Abbas Bandi Bibi (59 I.A. 236), Roberts vs Davey ; distinguished.
|
Appeal No. 92 of 1952.
Appeal by special leave from the Judgment and Order dated 16th May, 1951, of the High Court of Judicature at Calcutta (Harries C. J. and Das J.) in Appeal from Original Order No. 136 of 1949 arising out of Judgment and Order dated the 25th April, ' 1949, of the said High Court (Banerjee J.) in Extra ordinary Suit No. 2 of 1948.
N. C. Chatterjee (B. Sen, with him) for the appellant.
section P. Sinha (A. K. Dutt, with him) for the respondent.
February 27.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal, which has come before us on special leave, is directed against a judgment of an Appellate Bench of the Calcutta High Court, dated the 16th May, 1951, by which the learned Judges dismissed an appeal taken against an order, made by a single Judge on the Original Side of that Court,, under clause 13 of the Letters Patent, on the preliminary ground that the appeal was not competent in law.
There is no dispute about the material facts of the case which lie with in a short compass.
On 7th August, 1947, a suit was filed by the respondent Kumar Rupendra Deb Raikot in the Court of the Subordinate Judge at Jalpaiguri in West Bengal,being Title Suit No. 40 of 1947,for recovery of possession of a large estate known as Baikunthapur Raj situated in that district, on the allegation that he, being the eldest son of late Prosanna Deb Raikot, the last holder of the estate, became entitled to the properties on the I death of his father under a custom of the family which excludes all females from inheritance and follows the rule of Iineal 1161 primogeniture in matters of succession.
Prosanna died in December, 1946, and Asrumati Debi, the appellant before us, is admittedly his widow.
There was no son born to her and her only child is a daughter named Prativa.
According to the plaintiff respondent, his mother Renchi Debi, who is a Lepcha by birth was another lawfully wedded wife of Prosanna and was married to the latter in what is known as the " Gandharba form.
Prosanna had three sons by this wife, the plaintiff being the eldest.
Asrumati, it is alleged, took possession of the bulk of the properties comprised in the estate on the death of her husband, although she had no legal right to the same and it was to evict her from these properties that this suit was brought.
Besides Asrumati, the plaintiff also impleaded three other agnatic relations of the deceased (who are defendants Nos. 2 to 4) and also his own two younger brothers as defendants to the suit.
Asrumati filed her written statement on January 19, 1948, and the main defence put forward by her was that there was no legal marriage between her husband and the plaintiff 's mother, the latter being only one of the several mistresses of her husband.
She denied that there was any custom in the family under which females were excluded from inheritance.
The defendants 2 to 4 also filed written statements, challenging the legitimacy of the plaintiff and his claim to succession, and put forward their own rights as heirs under the customary law obtaining in the family.
On 30th April, 1948, the plaintiff presented an application in the Original Side of the High Court of Calcutta under clause 13 of the Letters Patent, praying for transfer of the suit filed in the Jalpaiguri court to the High Court to be tried in its Extraordinary Original Civil Jurisdiction.
This application was heard by Banerjee J. sitting singly and by his order dated the 25th of April, 1949, the learned Judge allowed the application, substantially on the ground that having regard to the atmosphere of prejudice that was created in the locality by supporters of the defendant, who wielded 1162 considerable influence in the district, the plaintiff might have a legitimate apprehension that he would not get fair trial in the district court.
Against this decision the defendant No. 1 took an appeal to the Appellate Bench of the High Court of Calcutta and the learned Judges (Trevor Harries C. J. and Das J.) dismissed the appeal on the ground that the order appealed again was not a 'judgment ' within the meaning of clause 15 of the Letters Patent.
It is the propriety of this decision that has been challenged before us in this appeal.
The High Court of Calcutta in holding the appeal before it to be incompetent based its decision entirely upon an earlier pronouncement of a Division Bench of the same court, where it was held by Mookerjee A.C.J. sitting with Fletcher J. that an order for transfer of a suit made under clause 13 of the Letters Patent was not a 'judgment ' within the meaning of clause 15 (1).
Reliance was placed by the learned Judges for this view upon the pronouncement of Sir Richard Couch C. J. in the well known and often cited case of The Justice of the Peace for Calcutta vs The Oriental Gas Company (2), where the learned Chief Justice said as follows: "We think that 'judgment ' in clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability.
It may be either final or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.
" The identical question, whether an order for transfer under clause 13 of the Letters Patent is a 'judgment ' for purposes of appeal, was pointedly raised before the Madras and the Rangoon High Courts, and while the Madras High Court (3) answered the question hi the affirmative, a definitely negative answer was given by (1) See Khatizan vs Sonairam, I.L.R. (2) 8 Ben.
L.R. 433.
(3) Vide Krishns Reddi vs Thanikacha, I.L.R 47 Mad.
136. 1163 the Rangoon High Court (1).
The Madras decision purports to be in accordance with the view enunciated a Full Bench of that court in Tuljaram vs Alagappa(2) where Sir Arnold White C. J. sitting with Krishna swami Aiyar and Ayling JJ.
formulated a definition of 'judgment ' in a comprehensive manner differing fro the wide interpretation put upon the term in the earlier case of DeSouza vs Coles (3).
"The test seems me," thus observed the learned Chief Justice, "to be not what is the form of the adjudication, but what is its effect on the suit or proceeding in which it is made.
If its effect, whatever its form may be, and whatever may be the nature of the application on which it is made, is to put an end to the suit or proceeding so far as the court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, I think the adjudication is a judgment within the meaning of the clause.
" This decision, it may be pointed out, has not only been adhered to in Madras since then without any comment, but the Calcutta High Court has in several instances manifested a marked leaning towards it (4).
On the other hand, a Full Bench(1) of the Rangoon High Court presided over by Page C.J. took 'a view altogether different from that of the Calcutta and the Madras High Courts as regards the meaning of the word I judgment ' in clause 13 of the Rangoon Letters Patent, which corresponds to clause 15 of the Letters Patent of the Calcutta and Madras High Courts.
It was held by the Full Bench of the Rangoon High Court that the term 'judgment ' in the Letters Patent means and is a decree in a suit by which the rights of the parties in the suit are determined.
In other words, 'judgment ' is not what is defined in section 2 (9) of the Civil Procedure Code as being the statement given by the judge of the grounds of a decree (1) Dayabhai vs Muyugappa Chettiay, 13 Rang.
457 (F.B.).
(2) 35 M 1 (F.B.).
(3) (4) Vide Muathura Sundari vs Haran Chandra I.L.R. 43 Cal.
857; Chandi Charan vs Jnanendra 29 C.L.J. 225 at 229 Lea Badin vs Upendra Mohan Roy Chaudhury, 1164 or order, but is a judoment in its final and definitive sense embodying a decree.
A final ' judgment is an adjudication which conclusively determines the rights of the parties with regard to all matters in issue in the suit, whereas a preliminary or interlocutory judgment is a decree by which the right to the relief claimed in the suit is decided but under which further proceedings are necessary before a suit in its entirety can be disposed of.
Save and except final and preliminary judgments thus defined, all other decisions are ' orders ' and they do not come within the description of I judgments ' under the relevant clause of the Letters Patent.
No 'order ' is appealable unless an appeal is expressly provided against it by the Civil Procedure code or some other Act of the Legislature.
In this view an ' order ' for transferring a suit from a subordinate court to the High Court could not possibly be regarded as a 'judgment ', and consequently no appeal would lie against such an order.
This definition of ' judgment 'has been accepted in several cases by the Nagpur High Court (1), and substantially this seems to be the view of the Allahabad High Court also (2).
A Full Bench of the Lahore High Court(, '), however, has refused to accept this view and has preferred to follow the tests enumerated by the Calcutta and the Madras High Courts.
The Bombay High Court accepted the Calcutta view from the very beginning (4).
In view of this wide divergence of judicial opinion, it may be necessary for this court at some time or other to examine carefully the principles upon which the different views mentioned above purport to be based and attempt to determine with as much definiteness as possible the true meaning and scope of the word I judgment ' as it occurs in clause 15 of the Letters Patent of the Calcutta High Court and in the corresponding clauses of the Letters Patent of the other High Courts.
We are, however, relieved from embarking (1) Vide Kunwar Lal Singh vs Uma Devi, A.I.R. 1945 Nag.
156; Shankar Deo vs Kalyani, A.I.R. 1948 Nag. 85.
(2) Vide Shahzadi Begam vs Alakhnath, 57 All.
983 (F.B.) (3) Shaw Hari vs Sonah Mal Beli Ram, I.L.R. , (4) Vide Sonebai vs Ahmedbhai, , 1165 on such enquiry in the present case as we are satisfied that in none of the views referred to above could an order of the character which we have before us, be regarded as a judgment ' within the meaning clause 15 of the Letters Patent.
Couch C.J., as said already, defined 'judgment ' be a decision which determines some right or liability affecting the merits of the controversy between the parties.
It is true that according to the learned Chief Justice an adjudication, in order that it might rank as a 'judgment ', need not decide the case on its merits, but it must be the final pronouncement of the court making it, the effect of which is to dispose of or terminate the suit or proceeding.
This will be apparent from the following observations made by Couch C.J. in the course of his judgment in the case referred to above : " It is, however, said that this court has already put a wider construction upon the word I judgment ' in clause 15 by entertaining appeals in cases where the plaint has been rejected as insufficient, or as showing that the, claim is barred by limitation,, and also in cases where orders have been made in execution.
These however are both within the above definition of a judgment, and it by no means follows that, because we hold the order in the present case not to be appealable, we should be bound to hold the same in the cases referred to.
For example, there is an obvious difference between an order for the admission of a plaint and an order for its rejection.
The former determines nothing, but is merely first step towards putting the case in a shape for determination.
The latter determines finally so far as the court which makes the order is concerned that the suit, as brought.
will not lie.
The decision, therefore, is a judgment in the proper sense of the term .
" It cannot be said, therefore, that according to Sir Richard Couch every judicial pronouncement on a right or liability between the parties is to be regarded 151 1166 as a 'judgment ', for in that case there would be any number of judgments in the course of a suit or proceeding, each one of which could be challenged by way of appeal.
The judgment must be the final pronounce ment which puts an end to the proceeding so far as the court dealing with it is concerned.
It certainly involves the determination of some right or liability, though it may not be necessary that there must be a decision on the merits.
This view, which is implied in the observations of Sir Richard Couch C.J. quoted above, has been really made the basis of the definition of I judgment ' by Sir Arnold White C.J. in the Full Bench decision of the Madras High Court to which reference has been made (1).
According to White C.J. to find out whether an order is a I judgment ' or not, we have to look to its effect upon the particular suit or proceeding in which it is made.
If its effect is to terminate the suit or proceeding, the decision would be a 'judgment ' but not otherwise.
As this definition covers not only decisions in suits or actions but 'orders ' in other proceedings as well which start with applications, it may be said that any final order passed on an application in the course of a suit, e.g., granting or refusing a party 's prayer for adjournment of a suit or for examination of a witness, would also come within the definition.
This seems to be the reason why the learned Chief Justice qualifies the general proposition laid down above by stating that "an adjudication on an application, which is nothing more than a step towards obtaining a final adjudication in the suit, is not a judgment within the meaning of the Letters Patent.
" As stated already, it is not our purpose in the present case to frame an exhaustive definition of the word 'judgment ' as used in clause 15 of the Letters Patent.
We have indicated what the essential features of a I judgment ' are according to both the Calcutta and the Madras High Courts and all that we need say is that, in our opinion, an order under clause 13 of the Letters Patent does not satisfy the tests of a 'judgment ' as formulated by either of these High Courts.
(1) Vide Tuljaram vs Alagappa, , 1167 The question that requires determination in an application under clause 13 of the Letters Patent is, whether a particular suit should be removed from any court which is subject to the superintendence of the High Court and tried and determined by the latter as a court of extraordinary original jurisdiction.
It is true that unless the parties to the suit are agreed on this point, there must arise a controversy between them which has to be determined by the court.
In the present case, a single Judge of the High Court has decided this question in favour of the plaintiff in the suit; but a decision on any and every point in dispute between the parties to a suit is not necessarily a ' judgment '.
The order in the present case neither affects the merits of the controversy between the parties in the suit itself, nor does it terminate or dispose of the suit on any ground.
An order for transfer cannot be placed in the same category as an order rejecting a plaint or one dismissing a suit on a preliminary ground as has been referred to by Couch C.J. in his observations quoted above.
An order directing a plaint to be rejected or taken off the file amounts to a final disposal of the suit so far as the court making the order is concerned.
That suit is completely at an end and it is immaterial that another suit could be filed in the same or another court after removing the defects which led to the order of rejection.
On the other hand, an order of transfer under clause 13 of the Letters Patent is, in the first place, not at all an order made by the court in which the suit is pending.
In the second place, the order does not put an end to the suit which remains perfectly alive and that very suit is to be tried by another court, the proceedings in the latter to be taken only from the stage at which they were left in the court in which the suit was originally filed.
Mr. Chatterjee in the course of his arguments placed considerable reliance upon the pronouncement of the Calcutta High Court in Hadjee Ismail vs Hadjee Mahomed (1), where it was held by Court C.J. and (1) 1168 Pontifex J. that an order refusing to rescind leave to sue granted under clause 12 of the Letters Patent was a 'judgment ' under clause 15 and could be challenged by way of appeal.
This decision was followed by the Bombay High Court in Vaghoji vs Camaji(1); and it is argued by Mr. Chatterjee that there is no difference in principle between an order of that description and an order transferring a suit under clause 13 of the Letters Patent.
The contention of Mr. Chatterjee undoubtedly receives support from the judgment of the Madras High Court in Krishna Reddy vs Thanikachala(2),where precisely the same line of reasoning was adopted.
In our opinion, this reasoning is not sound and there is an essential difference between an order rescinding or refusing to rescind leave to sue granted under clause 12 of the Letters Patent and one removing a suit from a subordinate court to the High Court under clause 13 of the Letters Patent, and this distinction would be apparent from the observations of Sir Arnold White C.J. in the Madras Full Bench case(3) mentioned above, to which sufficient attention does not appear to have been paid by the learned Judges of the same court who decided the later case.
Referring to the decision of the Bombay High Court in Vaghoji vs Camaji(1), White C.J. observed as follows: "As regards the Bombay authorities I may refer to Vaghoji vs Camaji(1), where it was held that an appeal lay from an order dismissing a Judge 's summons to show cause why leave granted under clause 12 of the Letters Patent should not be rescinded and the plaint taken off the file.
Here the adjudication asked for, if made, would have disposed of the suit.
So also would an order made under an application to revoke a submission to arbitration.
I think such an order is appealable." Leave granted under clause 12 of the Letters Patent constitutes the very foundation of the suit which is instituted on its basis.
If such leave is rescinded.
the (1) I.L.R. (2) I.L.R. 47 Mad.
(3) Vide Tuljaram vs Alagappa 1169 suit automatically comes to an end and there is no doubt that such an order would be a judgment.
If, on the other hand, an order is made dismissing the Judge 's summons to show cause why the leave should not be rescinded, the result is, as Sir Lawrence Jenkins pointed out(1), that a decision on a vital point adverse to the defendant, which goes to the very root of the suit, becomes final and decisive, against him so far as the court making the order is concerned.
This brings the order within the category of a 'judgment ' as laid down in the Calcutta cases.
We need not express any final opinion as to the propriety or otherwise of this view.
It is enough for our purpose to state that there is a difference between ail order refusing to rescind leave granted under clause 12 of the Letters Patent and one under clause 13 directing the removal of a suit from one court to another, and there is no good reason to hold that the principle applicable to one applies to the other also.
The result, therefore, is that, in our opinion, the view taken by the High Court is right and this appeal should fail, and is dismissed with costs.
Appeal dismissed.
Agent for the respondent No. 1 : Sukumnar Ghose for P. C. Dutt.
| An order for transfer of a suit, made under clause 13 of the Letters Patent of the Calcutta High Court is not a "judgment" within the meaning of clause 15 of the Letters Patent and no appeal lies therefrom under the Letters Patent, as it neither affects the merits of the controversy between the parties in the suit itself, nor terminates or disposes of the suit on any ground.
[Meaning of the word "judgment" discussed].
Khatizan vs Sonairam (I.L.R. , Justices of the Peace for Calcutta vs Oriental Gas Co. , Dayabhai vs Murugappa Chettiar (I.L.R. 13 Rang.
457), Tuljaram vs Alagappa (I.L.R. , Mathura Sundari vs Haranchandra (I.L.R. , Chandicharan vs Tnanendra (29 C.L.J. 225), Lea Badin vs Upendra Mohan Boy Chowdhry , Kanwar Lal Singh vs Uma Devi (A.I.R. 1945 Nag. 156), Sankar Deo vs Kalyani (A.I.R. , Shahzadi Begum vs Alaknath (I.L.R. 57 All. 983), Shaw Hari vs Sonahal Beli Ram (I.L.R. 23 1160 Lab. 491), Sonebai vs Ahmedbhai and Vaghoji vs Gamaji (I.L.R. referred to.
Krishna Reddi vs Thanikachala (I.L.R. 47 Mad. 136) disapproved.
|
Appeal No. 182 of 1952.
Appeal by special leave from the Judgment and Order dated 2nd August, 1951, of the High Court of Judicature at Nagpur in Miscellaneous Petition No. 187 of 1950 under articles 226 and 227 of the Constitution.
N. C. Chatterjee (R. M. Hajarnavis, with him) for the appellant.
R. Ganapathy Iyer for the State of Madhya Pradesh.
February 23.
The Judgment of the Court was delivered by DAS J.
On the 28th November, 1947, the appellant Hoosein Kasam Dada (India) Ltd., (hereinafter referred to as the assessee) submited to the Sales Tax Officer, Akola, a Sales Tax return in Form IV for the first quarter.
Notice in Form XI calling upon the assessee to produce evidence in support of the said return having been issued by the Sales Tax Officer, the assessee produced his account books.
Not being satisfied by the inspection of the account books as to the correctness of the return and being of opinion that the taxable turnover exceeded rupees two lacs the Sales Tax Officer submitted the case to the Assistant Commissioner of Sales Tax, Amravati, for assessment, 989 On the 25th January, 1949, the Assistant Commissioner issued a fresh notice in Form XI under section 11 and fixed the case for disposal on the 5th February, 1949.
After various adjournments and proceedings to which it is not necessary to refer, the hearing commenced on the 9th June, 1949, when an agent of the assessee appeared with books of account of the Akola Branch.
Eventually after various further proceedings the Assistant Commissioner on the 8th April, 1950, assessed the assessee, to the best of his judgment, in the sum of Rs. 58,657140 and a copy of the order in Form XIV was sent to the assessee.
Being aggrieved by the order of assessment the assessee on the 10th May, 1950, preferred an appeal to the Sales Tax Commissioner, Madhya Pradesh, under section 22(l) of the Central Provinces and Berar Sales Tax Act, 1947 (hereinafter referred to as the Act).
The appeal not having been accompanied by any proof of the payment of the tax in respect of which the appeal had been preferred, the authorities, after giving the assessee several adjournments, declined to admit the appeal.
The assessee moved the Board of Revenue, Madhya Pradesh, by a revision application against the order of the Sales Tax Commissioner contending that his appeal was not governed by the proviso to section 22(l) of the Act as amended on the 25th November, 1949, by the Central Provinces and Berar Sales Tax (Second Amendment) Act (Act LVII of 1949) but was governed by the proviso to section 22(l) of the Act as it stood when the assessment proceedings were started, i.e., before the said amendment.
The Board of Revenue took the view that as the order of assessment was made after the amendment of the section and the appeal was filed thereafter such appeal must be governed by the provisions of law as it existed at the time the appeal was actually filed and that the law as it existed before the filing of the appeal could not apply to the case.
The assessee thereupon moved the High Court of Madhya Pradesh under articles 226 and 227 of the Constitution of India praying, amongst other things, for a writ of mandamus or an appropriate 128 990 order directing the Sales Tax Commissioner to admit and hear the appeal without demanding payment of the amount of sales tax assessed by the Assistant Commissioner of Sales Tax.
The High Court dismissed the application on the 2nd August, 1951.
The assessee applied to the High Court for leave to appeal to this Court which was also dismissed by the High Court on the 14th March, 1952. 'The assessee thereupon applied to this Court for special leave to appeal on the 12th May, 1952.
This Court granted special leave to appeal, but such leave was, by the order granting such leave, limited to the question of the effect of the amendment to section 22 of the Act on the petitioner 's appeal to the Sales Tax Commissioner, Madhya Pradesh.
This Court took the view that the other questions sought to be raised by the assessee would have to be decided by the Sales Tax Commissioner in case the appeal succeeded.
The appeal has now come up for final disposal before us and in this appeal we are concerned only with the limited question of the effect of the amendment to section 22 of the Act.
Section 22(l) of the Act was originally expressed in the following terms : "22.
(1) Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order: Provided that no appeal against an order of assessment, with or without penalty, shall be entertained by the said authority unless it is satisfied that such amount of tax or penalty or both as the appellant may admit to be due from him, has been paid." The relevant portion of section 22 as amended runs as follows: "22.
(1) Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order: Provided that no appeal against an order of assessment, with or without penalty shall be admitted by the said authority unless such appeal is accompanied by a satisfactory proof of the payment of the tax, with 991 penalty, if any, in respect of which the appeal has been preferred.
" It is clear from the language used in the proviso to section 22 (1) as it stood prior to the amendment that an aggrieved assessee had only to pay such amount of tax as he might admit to be due from him, whereas under the proviso to section 22(l) as amended the appeal has to be accompanied by satisfactory proof of payment of the tax in respect of which the appeal had been preferred.
The contention of the present assessee is that as the amendment has not been made retrospective its right of appeal under the original section 22(l) remains unaffected and that accordingly as it does not admit anything to be due it was not liable to deposit any sum along with its appeal and the Commissioner was bound to admit its appeal and had no jurisdiction or power to reject it on the ground that it had not been accompanied by any proof of payment of the tax assessed against the appellant as required under the amended proviso and the Board of Revenue and the High Court were in error in not directing the Commissioner to admit the appeal.
That the amendment has placed a substantial restriction on the assessee 's right of appeal cannot be disputed, for the amended section requires the payment of the entire assessed amount as a condition precedent to the admission of its appeal.
The question is whether the imposition of such a restriction by amendment of the section can affect the assessee 's right of appeal from a decision in proceedings which commenced prior to such amendment and which right of appeal was free from such restriction under the section asit stood at the time of the commencement of the proceedings.
The question was answered in the negative by the Judicial Committee in Colonial.
Sugar Refining Co., Ltd. vs Irving(1).
In that case the Collector of Customs acting under an Act called the Excise Tariff Act, 1902, required the appellants to pay pound 20,100 excise duty on 6,700 tons of sugar.
The appellants disputed the claim.
So they deposited (1) 992 the money with the Collector and then brought the action by issuing a writ on the 25th October, 1902.
A special case having been stated for the opinion of the Supreme Court, that Court on the 4th September, 1903, gave judgment for the Collector.
In the meantime the Judiciary Act, 1903, was passed and received Royal assent on the 25th August, 1903, that is to say about 10 days before the judgment was delivered.
By section 39(2) of that Act the right of appeal from the Supreme Court to the Privy Council given by the; Order in Council of 1860 was taken away and the only appeal therefrom was directed to lie to the High Court of Australia.
The appellants having with the leave of the Supreme Court filed an appeal to the Privy Council the respondents filed a petition taking the preliminary point that no appeal lay to the Privy Council and praying that the appeal be dismissed.
in dismissing that application Lord Macnaghten who delivered the judgment of the Privy Council said: "As regards the general principles applicable to the case there was no controversy.
On the one hand, it was not disputed that if the matter in question be a matter of procedure only, the petition is well founded.
On the other hand, if it be more than a matter of procedure, if it touches a right in existence at the passing of the Act, it was conceded that, in accordance with a long line of authorities extending from the time of Lord Coke to the present day, the appellants would be entitled to succeed.
The Judicary Act is not retrospective by express enactment or by necessary intendment.
And therefore the only question is, was the appeal to His Majesty in Council a right vested in the appellants at the date of the passing of the Act, or was it a mere matter of procedure ? It seems to their Lordships that the question does not admit of doubt.
To deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him as of right is a very different thing from regulating procedure.
In princi ple, their Lordships see no difference between abolishing an appeal altogether and transferring the appeal to a new tribunal.
In either case there is an interference 993 with existing rights contrary to the well known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested.
" The principle of the above decision was applied by Jenkins C.J. in Nana bin Aba vs Sheku bin Andu (1) and by the Privy Council itself in Delhi Cloth and General Mills Co. Ltd. vs Income tax Commissioner, Delhi( ').
A Full Bench of the Lahore High Court adopted it in Kirpa Singh vs Rasaldar Ajaipal Singh (3).
It was there regarded as settled that the right of appeal was not a mere matter of procedure but was a vested right which inhered in a party from the com mencement of the action in the Court of first instance and such right could not be taken away except by an express provision or by necessary implication.
In Sardar Ali vs Dalimuddin (4), the suit out of which the appeal arose was filed in the Munsiff 's Court at Alipore on the 7th October, 1920.
The suit having been dismissed on the 17th July, 1924, the plaintiffs appealed to the Court of the District Judge but the appeal was dismissed.
The plaintiffs then preferred a second appeal to the High Court on the 4th October, 1926.
That second appeal was heard by a Single Judge and was dismissed on the 4th April, 1928.
In the meantime Clause 15 of the Letters Patent was amended on the 14th January 1928 so as to provide that no further appeal should lie from the decision of a Single Judge sitting in second appeal unless the Judge certified that the case was a fit one for appeal.
In this case the learned Judge who dismissed the second appeal on the 4th April, 1928, declined to give any certificate of fitness.
The plaintiffs on the 30th April, 1928, filed an appeal on the strength of clause 15 of the Letters Patent as it stood before the amendment.
The contention of the appellants was that the amended clause could not be applied to that appeal, for to do so would be to apply it retrospectively and to impair and indeed to defeat a substantive right which was in existence (1) Bom.
(3) A. I. R 1928 Lah.
(2) (1927) L.R. 54 I.A. Lah.
(4) Cal.
994 prior to the date of the amendment.
The apppllants claimed that on the 7th October, 1920, when the suit was filed they had vested in them by the existing law a substantive right to a Letters Patent appeal from the decision of a Single Judge and that an intention to interfere with it, to clog it with a new condition or to impair or imperil it could not be presumed unless it was clearly manifested by express words or necessary intendment.
In giving effect to the contentions of the appellants Rankin C.J. observed at p. 518: Now, the reasoning of the Judicial Committee in The Colonial Sugar Refining Company 's case is a conclusive authority to show that rights of appeal are not matters of procedure, and that the right to enter the superior court is for the present purpose deemed to arise to a litigant before any decision has been given by the inferior court.
If the latter proposition be accepted, I can see no intermediate point at which to resist the conclusion that the right arises at the date of the suit.
" It was held that the new clause could not be given retrospective effect and accordingly the date of pre sentation of the second appeal to the High Court was not the date which determined the applicability of the amended clause of the Letters Patent and that the date of the institution of the suit was the determining factor.
As against the last mentioned decision of the Calcutta High Court Sri Ganapathy Aiyar, appearing for the respondent, refers us to the decision of a Bench of the Bombay High Court in the case of Badruddin Abdul Rahim vs Sitaram Vinayak Apte (1), where it was held that the amendment of clause 15 of the Letters Patent operated retrospectively.
That case followed an earlier decision of the same High Court in Fram Bomanji vs Hormasji Barjorji (2).
The decision in the old case proceeded upon two grounds, namely, (1) that the question was one of procedure and (2) that sec (1) Bom.
753; A.I.R. (1928) Bom.
(2) (1866) Bom.
H.C. (O.C.J.) 49. 995 tion 2 of the New Letters Patent of 1865 gave retrospective operation to the Letters Patent by making it applicable to all pending suits.
In so far as the first ground is concerned it clearly runs counter to the decision of the Privy Council in Colonial Sugar Refining Co. Ltd. vs Irving (supra) and must be taken as overruled as Fawcett J. himself acknowledged at page 756.
As regards the second ground it is inapplicable to the case before us and it is not necessary to express any opinion as to the. soundness and validity of that ground.
It may be mentioned here that in Shaikh Hasan Abdul Karim vs King Emperor (1) another Bench of the same High Court expressly dissented from the decision in Badruddin Abdul Rahim vs Sitaram Vinayak Apte (supra).
The principle laid down in the Colonial Sugar Refining Co. 's case (supra) was followed by a Special Bench of Madras in In re Vasudeva Samiar (2).
A Full Bench of the Allahabad High Court in Ram Singha vs Shankar Dayal (3) fell into line and held that the earlier decision on this point of that Court in Zamin Ali Khan vs Genda (4) stood overruled by the Privy Council decision in the Colonial Sugar Refining Co. 's case.
A Full Bench of Nagpur High Court in Radhakisan vs Shridar (5 ) has also taken the same view.
The Punjab High Court has also adopted the same line in Gordhan Das vs The Governor General in Council (1).
The case of Nagendra Nath Bose vs Mon Mohan Singha Roy (7) is indeed very much to the point.
In that case the plaintiffs instituted a suit for rent valued at Rs. 1,30615 and obtained a decree.
In execution of that decree the defaulting tenure was sold on the 20th November, 1928, for Rs. 1,600.
On the 19th December, 1928, an application was made, under Order XXI, rule 90 of the Code of Civil Procedure, by the present petitioner, who was one of the judgment debtors, (1) I.L.R (2) A I.R. ; (3) All. 965; A.I.R. (1928) All.
(4) All. 375.
(5) A.I.R. (1950) Nag.
(6) A.I.R, (1952) Punjab 103 (F.B.), (7) 996 for setting aside the sale.
application having been dismissed for default of his appearance the petitioner preferred an appeal to the District Judge of Hoogly who refused to admit the appeal on the ground that the amount recoverable in execution of the decree had not been deposited as required by the proviso to section 174, clause (c), of the Bengal Tenancy Act as amended by an amending Act in 1928.
The contention of the petitioner was that the amended provision which came into force on the 21st February, 1929, could not affect the right of appeal from a decision on an application made on the 19th December, 1928, for setting aside the sale.
Mitter J. said at page 1011: " We think the contention of the petitioner is wellfounded and must prevail.
That a right of appeal is a substantive right cannot now be seriously disputed.
It is not a mere matter of procedure.
Prior to the amendment of 1928 there was an appeal against an order refusing to set aside a sale (for that is the effect also where the application to set aside the sale is dismissed for default) under the provisions of Order 43, rule (1), of the Code of Civil Procedure.
That right was unhampered by any restriction of the kind now imposed by section 174(5), Proviso.
The Court was bound to admit the appeal whether appellant deposited the amount recoverable in execution of the decree or not.
By requiring such deposit as a condition precedent to the admission of the appeal, a new restriction has been put on the right of appeal, the, admission of which is now hedged in with a condition.
There can be no doubt that the right of appeal has been affected by the new provision and in the absence of an express enactment this amendment cannot apply to proceedings pending at the date when the new amendment came into force.
It is true that the appeal was filed after the Act came into force, but that circumstance is immaterial for the date to be looked into for this purpose is the date of the original proceeding which eventually culminated in the appeal." 997 The, above decisions quite firmly establish and our decisions in Janardan Reddy vs The State (1) and in Ganpat Rai vs Agarwal Chamber of Commerce Ltd. (2) uphold the principle that a right of appeal is not merely a matter of procedure.
It is matter of substantive right.
This right of appeal from the decision of an .inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in, and before a decision is given by, the inferior court.
In the language of Jenkins C.J. in Nana bin Aba vs Shaik bin Andu (supra) to disturb an existing right of appeal is not a mere alteration in procedure.
Such a vested right cannot be taken away except by express enactment or necessary intendment.
An [intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication.
Sri Ganapathy Aiyar urges that the language of section 22(1) as amended clearly makes the section ret.
rospective.
The new proviso, it is pointed out, peremptorily requires the authority not to admit the appeal unless it be accompanied by a satisfactory proof of the payment of the tax in respect of which the appeal is preferred and this duty the authority must discharge at the time the appeal is actually preferred before him.
The argument is that after the amendment the authority has no option in the matter and he has no jurisdiction to admit any appeal unless the assessed tax be deposited.
It follows, therefore, by necessary implication, according to the learned Advocate, that the amended provision applies to an appeal from an assessment order made before the date of amendment as well as to an appeal from an order made after that date.
A similar argument was urged before the Calcutta Special Bench in Sardar Ali vs Dalimuddin (supra), namely, that after the amendment the court had no authority to entertain an appeal without a certificate from the Single Judge.
(1) (2) 129 998 Rankin C.J. repelled this argument with the remark at page 520: " Unless the contrary can be shown, the provision which takes away jurisdiction is itself subject to the implied saving of the litigants ' right." In our view the above observation is apposite and applies to the case before us.
The true implication of the above observation as of the decisions in the other cases referred to above is that the pre existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment.
The fact that the pre existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right.
As the old law continues to exist for the purpose of supporting the pre existing right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right.
The argument that the authority has no option or jurisdiction to admit the appeal unless it be accompanied by the deposit of the assessed tax as required by the amended proviso to section 22(1) of the Act overlooks the fact of existence of the old law for the purpose of supporting the pre existing right and really amounts to begging the question.
The new proviso is wholly inapplicable in such a situation and the jurisdiction of the authority has to be exercised under the old law which so continues to exist.
The argument of Sri Ganapathy lyer on this point, therefore, cannot be accepted.
The learned Advocate urges that the requirment as to the deposit of the amount of the assessed costs does not affect the right of appeal itself which still remains intact, but only introduces a new matter of procedure.
He contends that this case is quite different from the case of Sardar Ali vs Dalmuddin (supra), for in this case it is entirely in the power of the appellant to deposit the tax if he chooses to do so whereas it was not 999 within the power of the appellant in that case to secure a certificate from the learned Single Judge who disposed of the second appeal.
In the first place the onerous condition may in a given case prevent the exercise of the right of appeal, for the assessee may not be in a position to find the necessary money in time.
Further this argument cannot prevail in view of the decision of the Calcutta High Court in Nagendra Nath Bose vs Mon Mohan Singha (supra).
No cogent argument has been adduced before us to show that that decision is not correct.
There can be no doubt that the new requirement "touches" the substantive right of appeal vested in the appellant.
Nor can it be overlooked that such a requirement is calculated to interfere with or fetter, if not to impair or imperil, the substantive right.
The right that the amended section gives is certainly less than the right which was available before.
A provision which is calculated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure.
Indeed the new requirement cannot be said merely to regulate the exercise of the appellant 's pre existing right but in truth whittles down the right itself and cannot be regarded as a mere rule of procedure.
Finally, Sri Ganapathy lyer faintly urges that until actual assessment there can be no 'lis ' and, therefore, no right of appeal can accrue before that event.
There are two answers to this plea.
Whenever there is a proposition by one party and an opposition to that proposition by another a 'lis ' arises.
It may be conceded, though not deciding it, that when the assessee files his return a 'lis ' may not immediately arise, for under section 11 (1) the authority may accept the return as correct and complete.
But if the authority is not satisfied as to the correctness of the return and calls for evidence, surely a controversy arises involving a proposition by the assessee and an opposition by the State.
The circumstance that the authority who raises the dispute is himself the judge can make no difference, for the authority raises the dispute in the interest of the State and in so acting only represents the State.
It 1000 will appear from the dates given above that in this case the 'lis ' in the sense explained above arose before the date of amendment of the section.
Further, even if the 'lis ' is to be taken as arising only on the date of assessment, there was a possibility of such a 'lis ' arising as soon as proceedings started with the filing of the return or, at any rate, when the authority called for evidence and started the hearing and the right of appeal must be taken to have been in existence even at those dates.
For the purposes of the accrual of the right of appeal the critical and relevant date is the date of initiation of the proceedings and not the decision itself.
For all the reasons given above we are of the opinion that the appellant 's appeal should not have been rejected on the ground that it was not accompanied by satisfactory proof of the payment of the assessed tax.
As the appellant did not admit that any amount was due by it, it was under the section as it stood previously entitled to file its appeal without depositing any sum of money.
We, therefore, allow this appeal and direct that the appeal be admitted by the Commissioner and be decided in accordance with law.
The appellant is entitled to the costs of this appeal and we order accordingly.
Appeal allowed.
Agent for appellant: Rajinder Narain.
Agent for respondent: G. H. Rajadhyaksha.
| The right of appeal is a matter of substantive right and not merely a matter of procedure, and this right becomes vested in a party when the proceedings are first initiated in, and before a decision is given by, the inferior Court and such a right cannot be taken away except by express enactment or necessary intendment.
Section 22(l.) of the Central Provinces and Berar Sales Tax Act, 1947, provided that no appeal against an order of assessment should be entertained by the prescribed authority unless it was satisfied that such amount of tax as the appellant might admit to be due from him, had been paid.
This Act was amended on the 25th November, 1949, and section 22(l) as amended provided that no appeal should ])a admitted by the said authority unless such appeal was accompanied by satisfactory proof of the payment of the tax in respect of which the appeal had been preferred.
On the 28th of November, 1947, the appellant submitted a return to the Sales Tax Officer, who, finding that the turnover exceeded 2 lacs, submitted the case to the Assistant Commissioner for disposal and the latter made an assessment on the 8th April, 1950.
The appellant preferred an appeal on the 10th May, 1950, without depositing the amount of tax in respect of which he had appealed.
The Board of Revenue was of opinion that section 22(l.) as amended applied to the case as the assessment was made, and the appeal was preferred, after the amendment came into force, ' and rejected the appeal.
Held, (i) that the appellant had a vested right to appeal when the proceedings were initiated, i.e., in 1947, and his right to appeal was governed by the law as it existed on that date ; (ii) that the amendment of 1950 cannot be regarded as a mere alteration in procedure or an alteration regulating the exercise of the right of appeal, but whittled down the right itself, and it had no retrospective effect as the Amendment Act of 1950 did not expressly or by necessary intendment give it retrospective effect, and the 988 appeal could not therefore be rejected for non payment of the tax in respect of which the appeal was preferred.
Colonial Sugar Refining Co. Ltd. vs Irving , Nanabin Aba vs Sheku bin Andu (I.L.R. , Delhi Cloth and General Mills Co. Ltd. vs Income tax Commissioner, Delhi (54 I.A. 421), Kirpa Singh vs Rasaldar Ajaipal Singh (A.I.R. 1928 Lab. 627), Sardar Ali vs Dalimuddin (I.L.R. applied.
Badraddin Abdul Rahim vs Sitaram Vinayak Apte (I.L.R. disapproved.
In re Vasudeva Samiar (A.I.R. 1929 Mad. 381), Ram Singha vs Sankar Dayal (I.L.R. 50 All. 965), Radhakisan vs Sri Dhar (A.I.R. , Gordhan Das vs Governor General in Council (A.I.R. 1950 Punj. 103) and Nagendra Nath Bose vs Monmohan referred to.
|
Appeal No. 168 of 1952.
Appeal from a Judgment and Decree dated 23rd July, 1951, of the Court of the Judicial Commissioner, Vindhya Pradesh, in Civil First Appeal No. 26 of 1951 arising out of the Judgment and Decree dated 14th March, 1951, of the Court of the District Judge, Umaria, in Case No. 32 of 1951.
N. section Bindra (section L. Chhibber, with him) for the appellants.
section P. Sinha (K. B. Asthana, with him) for the respondents.
March 12.
The Judgment of the Court was delivered by MAHAJAN J.
The suit out of which this appeal arises was instituted by the plaintiff respondents in the court of the district judge of Umaria, for recovery of Rs. 34,000 principal, and Rs. 2,626 interest, due on foot of mutual dealings.
The suit was dismissed by the district judge but was decreed on appeal by the Judicial Commissioner of Vindhya Pradesh.
A certificate for leave to appeal to this Court was granted as the case fulfilled all the conditions and requirements in force relating to appeals to the Supreme Court.
The defendants did not admit the claim and it was pleaded that no accounts were explained to them when the signatures of Bhaiyalal and Hiralal were obtained in the plaintiffs ' ledger on 3rd September, 1949, acknowledging the suit amount as due from them.
It was further pleaded that no suit could be based merely on an acknowledgment of the debt.
In para graph 4 of the written statement it was alleged that the plaintiff No. 2 Dipchand having threatened to bring a suit against defendants I and 2 whose financial position was bad and having represented that plaintiff No. 1 Badkulal would be angry and abuse plaintiff No. 2, and having assured on oath by placing his hand on a deity in a temple that no suit shall be 760 brought, and that amount of interest would be reduced asked defendants 1 and 2 to sign the khata, who signed the same without going through the accounts, on the faith of these statements made by Dipchand and that the defendants were not bound by these signatures.
In paragraph 9 of the written statement it was alleged that in fact Rs. 15,000 or 16,000 as principal sum were due to plaintiffs from defendants but the suit had been filed for a much larger sum than due.
Issue I framed by the district judge was in these terms : " Did the defendants Hiralal and Bhaiyala I sign on Bhadon Sudi 11 Samvat 2006 in the capacity of manager and head of the family, on the khata of, the plaintiffs after understanding the debit and credit accounts and accepting Rs. 34,000 as the correct balance due to the plaintiffs.
" It would have been more correct had a separate issue been framed on the two points compositely mentioned in this issue.
Be that as it may, the form in which the issue was framed is not material for the decision of the appeal.
Issue 7 was in these terms : " Did the plaintiff Dipchand obtain the signature of defendants 1 and 2, in their bahi under the threat of instituting a suit and giving the assurance of the suit being not filed and leaving the interest which is incorrect and very much exaggerated, by saying that Badkulal shall be very angry with him. ".
The frame of the issue shows that the learned judge at this stage made no effort to ascertain or apprehend the nature of the plea taken in the written statement.
He seems to have acted more as an automaton than as a judge in the discharge of his responsible duties.
Before framing an issue like this it was his duty to examine the parties and to find out the precise nature of the plea involved within these facts ; in other words, whether the defendants wished to plead in defence fraud, coercion, undue influence or a mistake of fact entitling them to reopen the accounts.
Mr. Bindra for the appellants was unable to tell us 761 what real plea was involved in the facts stated under this issue.
The manner in which the learned judge dealt with this issue lends support to our view that he did not at all apprehend what he had to decide.
It was held that the defendants did not sign the entry after understanding, settling, and adjusting of the accounts, but that plaintiff Dipchand obtained their signatures without explaining the accounts to them.
The fact that the entry was signed by both the defendants who represented their family was not denied.
Hiralal, defendant, in the witness box admitted that the defendants deal in gold, silver and kirana and maintain regular books of account.
It was also admitted that two or three muneems are in their employ for maintaining regular books of the business dealings.
Hiralal was questioned " How much money was due from the defendants firm to the plaintiffs" He couldn 't firm?".
The answer was evasive, viz., say how much was due".
When questioned about his accounts, he replied that he had not filed them as he was ill.
He further deposed that he had looked into his accounts and Rs. 10,000 to Rs. 15,000 as principal and interest were due but he could not say what was the correct amount.
When asked whether on the date of signing the acknowledgment he looked into the books to see what amount was due from him, his answer was in the negative.
He further said that even after receiving notice he did not look into his own accounts to check as to what the correct balance was.
A leading question was put to him Whether on Bhadon Sudi 11 Samvat 2006 there Was an entry of Rs. 34,000 in the defendants ' khata as being the balance due from them to the plaintiffs.
The answer was again evasive.
He said " I could not say whether there was any such entry in his books." In these circumstances there was no justification for throwing out the plaintiffs ' suit on the ground that the accounts were not explained to the defendants by the plaintiffs.
The defendants had written the accounts in their own books from which the true balance could 762 be ascertained.
An inference from the statement of Hiralal can easily be raised that the balance entry of Rs. 34,000 also existed in his own books.
Mr. Bindra tried to get out of this situation by urging that it was no part of the defendants ' duty to produce the books unless they were called upon to do so and the onus rested on the plaintiffs to prove their case.
This argument has to be negatived in view of the observations of their Lordships of the Privy Council in Murugesam Pillai vs Manickavasaka Pandara(1), which appositely apply here.
This is what their Lordships observed: "A practice has grown up in Indian procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to the courts the best material for its decision.
With regard to third parties this may be right enough they have no responsibility for the conduct of the suit; but with regard to the parties to the suit it is, in their Lordships ' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the court the written evidence in their possession which would throw light upon the proposition.
" This rule was again reiterated in Rameshwar Singh vs Rajit Lal Pathak(2).
On the evidence of the parties it is clear that both parties are businessmen and each party has been maintaining accounts of their mutual dealings, and they met on 3rd September and in the plaintiffs ' book the defendants signed an entry on page 58 of the ledger which runs thus: `` Rs. 34,000 balance due to be received up to Bhadon Sudi 11 Samvat 2006 made by check and understanding of accounts with Hiralalji 's books.
" This acknowledgment was made below a number of entries made in this khats, on the credit and debit side and the mutual dealings had continued since (1) (1917) 44 I A. 99.
(2) A.I.R. 1929 P.C. 95, 763 several years.
The acknowledgment is signed by Hiralal and Bhaiyalal, with the following endorsement: "After adjusting the accounts Rs. 34,000 found correct payable.
" In these circumstances we are not able to understand the view of the district judge that it was not proved that the accounts were explained to the defendants by Dipchand.
It was unnecessary to do so because the defendants themselves were keeping accounts and they would not have signed the balance for Rs. 34,000 with the endorsement above cited, without reference to their own books or in the manner suggested in the written statement.
Plaintiff Dipchand in the witness box supported the plaintiffs ' case as laid in the plaint.
He deposed that " This accounting was done by my muneem Puranlal and Ram Prasad, muneem of Hiralal. .
Muneems explained and Hiralal signed after understanding it.
" In cross examination he said that muneems were checking the accounts and when both the muneems said that so much was the balance, Hiralal then signed and that Hiralal and Bhaiyalal themselves did not check any account.
The learned district judge and Mr. Bindra criticized the evidence of this witness and it was urged that he had made false and highly improbable statements with regard to the manner and circumstances in which the entry was signed.
The discrepancies in the statement relate to matters of no consequence.
In our opinion, his evidence along with the entry was sufficient to hold the plaintiffs ' case proved when the best evidence of their own books to disprove the plaintiffs ' case had been withheld by the defendants.
No satisfactory explanation had been given for the non production of the defendants ' books, and the evidence given by Hiralal does not do much credit to him.
Mr. Bindra contended that it should have been held that Bhaiyalal did not sign at the same time when the entry was written but he signed later on.
On this point Hiralal deposed that when be signed Bhaiyalal 99 764 was not present, that he signed afterwards, that Kulai muneem came with, the bahi saying that Badkulal and Dipchand had quarrelled among themselves that there should also be the signature of Bhaiyalal, that Bhaiyalal questioned him as to why the witness had signed, that he replied that Dipchand had told him after pointing his hand towards God that he would take no action so long as he lived, so he did not check, nor any one explained him the accounts, that on this he asked Bhaiyalal to sign and on his asking he signed.
It was for Bhaiyalal to explain his signature by going into the witness box but he did not give evidence in the case and there is no explanation why he did not do so.
Mr. Bindra 's contention therefore that it should be held that Bhaiyalal was not present when the acknowledgment was signed cannot be sustained.
The defendants tried to support their case by the statements of Kulai Prasad, muneem, and the other two muneems Ram Prasad and Puranlal.
So far as Kulai Prasad is concerned, he was in the plaintiffs ' service and was dismissed by Badkulal, plaintiff, on 31st March, 1950.
Much reliance cannot be placed on the statement of a dismissed and disgruntled employee.
He stated that Hiralal was not made to understand any accounts and Dipchand assured him on oath that he would raise no trouble during his life and asked Hiralal to sign and that Bhaiyalal signed on a different date.
This evidence is of a partisan character and no reliance can be placed on it.
Rain Prasad stated that he did not check the accounts of the plaintiffs from Bhadon Samvat 2006 and that Hiralal did not sign in his presence.
In cross examination he admitted that there were mutual dealings between the parties and that Hiralal might have signed after accounting was done.
He pretended ignorance of what happened on Bhadon Samvat 2006.
As regards Puranlal, he stated that after looking into the accounts and after mutual talk, Exhibit P 1 765 was written on Dip Chand 's asking, that accounts might have been told by Dipchand on the basis of the statement which he had with him, that no accounts were explained.
He further stated that Hiralal said to Dipchand "Please see me", on which Dipchand replied after raising his hand towards the temple " I shall not do anything unfair in my lifetime.
" In cross examination he admitted that the words " signed Bhurey Naik Raghunandan Prasad Bakalam Hira Lal ", and the words " after adjusting the accounts Rs. 34,000 found correctly payable signed Hiralal " were written by Hiralal himself.
It was further elicited in cross examination that the witness had forged a receipt and for forging that receipt he was sentenced to one year 's imprisonment in a criminal case started by Badkulal, plaintiffs This evidence therefore is not of much consequence in this case.
In these circumstances we are satisfied that the district judge not only approached the decision of the case from an erroneous point of view but he also incorrectly appreciated the material on the record.
The learned Judicial Commissioner was therefore perfectly justified in reversing his decision and.
in holding that on 3rd September, 1949, there was an adjustment of accounts actually done by the muneems and accepted by the principals and the story of coercion and misrepresentation was false.
Mr. Bindra next urged that the plaintiff 's suit should have been dismissed because it could not be maintained merely on the basis of an acknowledgment of liability, that such an acknowledgment could only save limitation but could not furnish a cause of action on which a suit could be maintained.
The Judicial Commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit.
We are satisfied that no exception can be taken to this conclusion.
It was held by the Privy Council in 766 Maniram vs Seth Rupchand(1), that an unconditional acknowledgment implies a promise to 'pay because that is the natural inference if nothing is said to the contrary.
It is what every honest man would mean to do.
In Fateh Chand vs Ganga Singh(2) the same view was taken.
It was held that a suit on the basis of a balance was competent.
In Kahanchand Dularam vs Dayaram Amritlal(3) the same view was expressed and it Was observed that the three expressions "balance due ", " account adjusted " and "balance struck" must mean that the parties had been through the account.
The defendant there accepted the statement of account contained in the plaintiff 's account book, and made it his own by signing it and it thus amounted to an " accounts stated between them " in the language of article 64 of the Limitation Act.
The same happened in the present case.
The acknowledgment which forms the basis of the suit was made in the ledger of the plaintiffs in which earlier mutual accounts had been entered and truly speaking, the suit was not based merely on this acknowledgment but was based on the mutual dealings and the accounts stated between them and was thus clearly maintainable.
Mr. Bindra drew our attention to a decision of the Allahabad High Court in Ghulam Murtuza vs Fasihunnissa(4) , wherein it was held that even if an acknowledgment implies a promise to pay it cannot be made the basis of suit and treated as giving rise to a fresh cause of action.
We have examined the decision and we are satisfied that it does not lay down good law.
For the reasons stated above this appeal has no merits and we accordingly dismiss it with costs.
Appeal dismissed '.
CO 2,0.3 (i) (1906) 33 I.A. 165.
(2) (1929) I.L.R.
Io Lab 748.
(3) (1929) I.L.R. to Lah.
(4) All 434.
| Where the defendants who had dealings with the plaintiffs for several years signed the following entry in the plaintiffs ' account book underneath the earlier entries: "After adjusting the accounts Rs. 34,000 found correct payable Held, that this amounted to an unqualified acknowledgment of liability to pay and implied a promise to pay and could be made the basis of the suit and gave rise to a fresh cause of action.
Maniram vs Seth Rup Chand (33 I.A. 165), Fateh Chand vs Ganga Singh (I.L.R. and Kahan Chand Dularam vs Dayalal Amritlal (I.L.R. relied on.
Ghulam Murtuza vs Fasihunnissa (I.L.R. 57 All. 434) overruled.
It is not a sound practice for those desiring to rely upon a certain state of facts to withhold from the court written evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the mere doctrine of onus of proof.
Murugesam Pillai vs Manickavasaka Pandara (44 I.A. 99) referred to.
|
54 of 1953.
Petition under Article 32 of the Constitution for a writ in the nature of habeas corpus.
Jai Gopal Sethi and Veda Vyas (section K. Kapur, A. K. Datt, A. N. Chona, B. Pathnaik and A. AT.
Sinha, with them) for the petitioners.
C.K. Daphtary, Solicitor General for India (Porus A.Mehta, with him) for the respondents.
March 12.
PATANJALI SASTRI C. J.
This is a petition for a writ of habeas corpus filed by one ham Narayan Singh on behalf of four gentlemen, namely, Dr. section P. Mukerjee, Shri N. C. Chatterjee, Pandit Nandial Sharma and Pandit Guru Dutt Vaid, who are the real petitioners in the case.
These persons were 653 arrested on the evening of the 6th March, 1953, and they are now being prosecuted for alleged defiance of an order prohibiting meetings and processions in the area in question, an offence punishable under section 188 of the Indian Penal Code.
Their detention is sought to be justified on the basis of two remand orders, the one alleged to have been passed by Mr. Dhillon, Additional District Magistrate, Delhi, at about 8 p. m. on the 6th March, 1953, and the other alleged to have been passed by the trying Magistrate at about 3 p. m. on the 9th March while adjourning the case on the representation made before him that a habeas "pus petition was being moved in this Court.
Various questions of law and fact have been argued before us by Mr. Sethi on behalf of the petitioner, but we consider it unnecessary to enter upon a discussion of those questions, as it is now conceded that the first order of remand dated the 6th March even assuming it was a valid one expired on the 9th March and is no longer in force.
As regards the order of remand alleged to have been made by the trying Magistrate on the 9th March, the position is as follows: The trying Magistrate was obviously proceeding at that stage under section 344 of the Criminal Procedure Code, which requires him, if he chooses to adjourn the case pending before him, " to remand by warrant the accused if in custody," and it goes on to provide: Every order made under this section by a court other than a High Court shall be in writing signed by the presiding Judge or Magistrate.
The order of the Magistrate under this section was produced before us in compliance with an order of this Court made on the 10th March, which directed the production in this Court as early as possible of the records before the Additional District Magistrate and the trying Magistrate together with the remand papers for inspection by Counsel for the petitioner.
The order produced merely directs the adjournment of the case till the 11th March and contains no direction for, remanding the accused to custody till that date.
Last 85 654 evening, four slips of paper were handed to the Registrar of this Court at 5 20 p. m.
On one side they purport to be warrants of detention dated 6th March and addressed to the Superintendent of Jail, Delhi, directing the accused to be kept in judicial lock up and to be produced in court on the 9th March 1953.
These warrants contain on their back the following endorsements: Remanded to judicial till 11th March, 1953" In a question of habeas corpus, when the lawfulness or otherwise of the custody of the persons concerned is in question, it is obvious that these documents, if genuine would be of vital importance, but they were not produced, notwithstanding the clear direction contained in our order of the 10th March.
The court records produced before us do not contain any order of remand made on the 9th March.
As we have already observed, we have the order of the trying Magistrate merely adjourning the case to the 11th.
The Solicitor General appearing on behalf of the Government explains that these slips of paper,which would be of crucial importance to the case, were with a police officer who was present in court yesterday, but after the Court rose in the evening the latter thought that their production might be of some importance and therefore they were filed before the Registrar at 5 20 p. m.
We cannot take notice of documents produced in such circumstances, and we are not satisfied that there was any order of remand committing the accused to further custody till the 11th March.
It has been held by this Court that in habeas corpus proceedings, the Court is to have regard to the legality or otherwise of the detention at the time of the return and not with reference to the institution of the proceedings.
The material date on the facts of this case is the 10th March, when the affidavit on behalf of the Government was filed justifying the detention as a lawful one.
But the position, as we have stated, is that on that date there was no order remanding the four persons to custody.
This Court has often reiterated before that those who 655 feel called upon to deprive other persons of their personal liberty in the discharge of what they conceive to be their duty, must strictly and scrupulously observe the forms and rules of the law.
That has not been done in this case.
The petitioners now before us are therefore entitled to be released, and they are set at liberty forthwith.
Petition allowed.
| In habeas corpus proceedings the Court is to have regard to the legality or otherwise of the detention at the time of the return and not with reference to the institution of the proceedings.
Section 344 of the Criminal Procedure Code requires a Magistrate, if he chooses to adjourn a case, " to remand by warrant the accused if in custody " and provides further that every order made under this section by a Court other than a High Court shall be in writing.
Where a trying Magistrate adjourned a case by an order in writing but there was nothing in writing on the record to show that he made an order remanding the accused to custody: Held, that the detention of the accused after the order of adjournment was illegal.
Those who feel called upon to deprive other persons of their personal liberty in the discharge of what they conceive to be their duty, must strictly and scrupulously observe the forms and rules of the law.
|
iminal Appeal No. 23 of 1952.
Appeal from an Order dated 18th January, 1952, of the High Court of Judicature at Calcutta (Chunder J.) in Criminal Reference Case No. 110 of 1951.
N.C. Talukdar and A. D. Dutt for the appellant.
Ajit Kumar Dutta, and section N. Mukherjee for the respondents.
March 12.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal under article 134(c) of the Constitution and raises the point whether a single Judge of the High Court of Judicature at Calcutta could bear a reference from an order under sections 431 and 432 of the Bengal Municipal Act XV of 1932.
The jurisdiction of a single Judge of the High Court in criminal matters is defined in the proviso to 768 rule 9, Chapter II, Part I of the Rules of the High Court and the relevant portion of the proviso runs as under: "Provided that a single Judge may hear any Ap.peal, Reference, or Application for revision other than the following: (1 )One relating to an order of sentence of death, transportation, penal servitude, forfeiture of property or of imprisonment, not being an order of imprisonment in default of payment of fine. . . . . " A single Judge therefore has no jurisdiction to deal with any reference or application for revision which relates to an order of forfeiture of property, and the question that arises in this appeal is whether the order passed by the learned District Magistrate, Baukura, under sections 431 and 432 of the Bengal Municipal Act, 1932, amounted to an order of forfeiture of property within the meaning of the above proviso.
The relevant, facts may be shortly stated as follows.
The respondents are the proprietors of several oil mills in the town of Bankura within the Bankura Municipality.
The Sanitary Inspector of the Municipality received on 6th March, 1950, information that the Manager of the Sree Gouranga Oil Mill, belonging to the respondents had deposited about 300 bags of rotten, decomposed, unwholesome mustard seeds in the courtyard of the Rice Mill of Sree Hanseswar Maji and about 600 bags of unwholesome mustard seeds in the mill godown of the respondents for sale and for the preparation of oil therefrom for sale.
On an application made by him in that behalf the Sub Divisional Officer, Bankura, duly issued a search warrant and the Sanitary Inspector on the same day found in possession of the respondents a huge quantity of mustard seeds which were found to be highly unsound, unwholesome and unfit for human consumption.
He seized the said seeds between the 6th March, 1950, and the 8th March, 1950, and after the completion of the seizure asked for written consent of the 769 respondents for destruction of the said mustard seeds which they refused.
The Sanitary Inspector therefore kept all the bags thus seized, viz., 951 1/2 bags, in ,the mill godowns of the respondents with their consent.
After several proceedings which it is not necessary to mention for the purpose of this appeal, the District Magistrate, Bankura, in M. P. No. 58 of 1950 under sections 431 and 432 of the Bengal Municipal Act on the 14th August, 1951, found that the stock of mustard seeds which was seized on the 6th March, 1950, was on that date and still was unfit for human consumption.
But in so far as no oil was coming out of the seeds and the seeds were capable of being used is manure or for cattle food he would not direct their destruction but directed that they should be disposed of by the Commissioners of the Bankura Municipality as manure or as cattle food ensuring before such disposal that the stocks in question bad been rendered incapable of being used as human food.
The respondents filed a petition under section 435 of the Criminal Procedure Code before the Additional Sessions Judge, Bankura, against the order of the District Magistrate, for a reference to the High Court.
The Additional Sessions Judge held that the seizure of the mustard seeds was illegal and that there was no evidence to show that the seeds in question were deposited in or brought to the places for the purpose of their sale or of preparation of oil for human consumption.
He therefore made a reference under section 438 of the Criminal Procedure Code to the High Court for quashing the proceedings.
Chunder J. accepted the reference, set aside the order of the District Magistrate and remanded the case for retrial by some other Magistrate, as in the opinion of the learned Judge, the District Magistrate had decided the matter upon his own observations formed during the inspection of the mustard seeds and not on the material in the record.
An application was made to a Bench of the High Court and leave was allowed on the point whether Chunder J. had jurisdiction sitting singly to bear the reference in view of the rule cited above.
770 Sri N.C.Taluqdar for the appellants urged that the order made by the District Magistrate, Bankura, under sections 431 and 432 of the Bengal Municipal Act, 1932, was an order for forfeiture of property within the meaning of the proviso to the rule and Chunder J. had no jurisdiction to deal with the reference and his order should be quashed.
Section 431 provides: "(1) Where any living thing, article of food, drug seized under section 428 is not destroyed by consent under sub section (1) of section 429, or where an article of food so seized which is perishable is not dealt with under sub section(2) of that section, it shall be taken before a Magistrate as soon as may be after such seizure.
(2)If it appears to the Magistrate that any such living thing is diseased or unsound or that any such food or drug is unsound, unwholesome or unfit for human food or for medicine, as the case may be. . . he shall cause the same to be destroyed at the expense of the person in whose possession it was at the time of its seizure, or to be otherwise disposed of by the Commissioners so as not to be capable of being used as human food or medicine Section 432 provides : "When any ' authority directs in exercise of any powers conferred by this chapter, the destruction of any living thing, food or any drug, or the disposal of the same so as to prevent its being used as food or medicine, the same shall thereupon be deemed to be the property of the Commissioners.
" The word "forfeiture" is defined in Murray 's Oxford Dictionary: " The fact of losing or becoming liable to deprivation of goods in consequence of a crime, offence, or breach of engagement the penalty of the transgression" or a "punishment for an offence".
It was contended that in so far as section 432 provided for the vesting of the condemned food or drug in the Commissioners the owner of the property was divested or deprived of the proprietary 771 rights therein and that the order made by the Magistrate under section 431 (2) was thus an order of forfeiture of the property.
This contention in our opinion is unsound.
According to the dictionary meaning of the word "forfeiture" the loss or the deprivation of goods has got to be in consequence of a crime, offence or breach of engagement or has to be by way of penalty of the transgression or a punishment for an off once.
Unless the loss or deprivation of the goods is by way of a penalty or punishment for a crime, offence or breach of engagement it would not come within the definition of for. feiture.
What is provided under section 431(2) is the destruction of the food or drug which is unsound, unwholesome or unfit for human food or medicine or the otherwise disposal of the same by the Commissioners so as not to be capable of being used as human food or medicine.
The vesting of such condemned food or drug in the Commissioners which is provided by section 432 is with a view to facilitate the destruction or the otherwise disposal of such food or drug by the Commissioners and is in no way a forfeiture of such food or drug by the Municipality.
The condemned food or drug by reason of its being found unsound, unwholesome or unfit for human food or medicine cannot be dealt with by the owner.
It must be destroyed or otherwise disposed of so as to prevent its being used as human food or medicine.
What the Municipal Commissioners are empowered to do therefore is what the owner himself would be expected to do and what is ordered to be done therefore cannot amount to a forfeiture of the property.
The order is not a punishment for a crime but is a measure to ensure that the condemned food or drug is not used as human food or medicine.
That this is the true position is clear from the pro visions of Chapter XXIV of the Act which provides for penalties.
Sections 501 to 504 prescribe penalties for specific offences and section 500 prescribes generally penalties for the several offences therein mentioned.
Section 431 however does not figure therein.
100 772 Forfeiture of property is thus not one of the penalties or punishments for any of the offences mentioned in the Bengal Municipal Act.
In the relevant provision in the rule of the ' High Court an order of sentence of death, transportation, penal servitude, forfeiture of property or of imprisonment are grouped together.
These orders are purely orders by way of penalty or punishment for the commission of crimes or offences and the forfeiture of property mentioned there is no other than the one which is entailed as a consequence of the commission of a crime or offence.
In order that such forfeiture of property would bar the jurisdiction of the single Judge it has to be a forfeiture of property which is provided by way of penalty or punishment for the commission of a crime or offence.
In spite of his labours Shri N. C. Taluqdar has not been able to point out to us any provision of the Bengal Municipal Act, 1932, which constitutes what is contemplated under section 431(2), a penalty or punishment for the commission of a crime or offence.
The offence that the respondent could be charged with is defined in section 421 of the Act and the punishment for that offence provided in section 500 is fine and not forfeiture.
We are therefore of the opinion that the order of the District Magistrate, Bankura, under sections 431 and 432 of the Bengal Municipal Act, 1932, dated 14th August, 1951, was not an order of forfeiture of property within the meaning of the proviso to rule 9, Chapter II, Part I, of the Rules of the High Court, and Chunder J. had the jurisdiction to entertain and decide the reference.
The result is that the appeal fails and is dismissed.
Appeal dismissed.
Agent for the appellant : Sukumar Ghose.
Agent for respondent: B. B. Biswas.
| An order of a District Magistrate under sections 431 and 432 of the Bengal Municipal Act (XV of 1932) for the disposal of an article of food which has been seized under section 428 of the said Act is not an order of forfeiture of property within the meaning of the proviso to rule 9 of Chap.
II of Part II of the Calcutta High Court Rules, and a Single Judge of the said High Court has jurisdiction to hear a reference from such an order.
Unless the loss or deprivation of property is by way of penalty or punishment for a crime, offence or breach of engagement it would not amount to a "forfeiture" of property.
|
Appeal No. 205 of 1952.
Appeal from the Judgment and Order dated the 16th September, 1952, of the High Court of Judicature at Madras (Subba Rao J.) in Writ Petition No. 599 of 1952 filed under the Special Original Jurisdiction of the High Court under article 226 of the Constitution of India.
M.C. Setalvad, Attorney General.for India (G. N. Joshi, with him) for the appellant and Intervener.
Mohan Kumaramangalam, for the respondent.
February 27.
The judgment of the court was delivered by PATANJALI SASTRI C.J.
This is an appeal from an order of a Single Judge of the High Court of Judicature at Madras issuing a writ of prohibition restraining the 1146 Election Commission, a statutory authority constituted by the President and having its offices permanently located at New Delhi, from enquiring into the alleged disqualification of the respondent for membership of the Madras Legislative Assembly.
The respondent was convicted by the Sessions Judge of East Godavari and sentenced to a term of seven years ' rigorous imprisonment in 1942, and he was released on the occasion of the celebration of the ludependence Day on 15th August, 1947.
In June, 1952, there was to be a by election to a reserved seat in the Kakinada constituency of the Madras Legislative Assembly, and the respondent, desiring to offer himself as a candidate but finding himself disqualified under section 7 (b) of the Representation of the People Act, 1951, as five years had not elapsed from his release, applied to the Commission on 2nd April, 1952, for exemp tion so as to enable him to contest the election.
No reply to the application having been received till 5th May, 1952, the last day for filing nominations, the respondent filed his nomination on that day, but no exception was taken to it either by the Returning Officer or any other candidate at the scrutiny of the nomination papers.
The election was held on 14th June, 1952, and the respondent, who secured the largest number of votes, was declared elected on 16th June, 1952.
The result of the election was published in the Fort St. George Gazette (Extraordinary) on 19th June, 1952, and the respondent took his seat as a member of the Assembly on 27th June, 1952.
Meanwhile, the Commission rejected the respondent 's application for exemption and communicated such rejection to the respondent by its letter dated 13th May, 1952, which however was not received by him.
On 3rd July, 1952, the Speaker of the Assembly read out to the House a communication received from the Commission bringing to his notice "for such action as he may think fit to take", the fact that the respondent 's application for exemption had been rejected.
A question as to the respondent 's disqualification having thus been raised, the Speaker referred the question to the Governor of 1147 Madras who forwarded the case to the Commission for its "opinion" as required by article 192 of the Constitution.
The respondent having thereupon challenged the competency of the reference and the action taken thereon by the Governor, the Commission notified the respondent that his case would be heard on 21st August, 1952.
Accordingly, the Chief Election Commissioner (who wag the sole Member of the Commission for the time being) went down to Madras and heard the respondent 's counsel and the Advocate General of Madras on 21th August, 1952, when it was agreed that, in case the petitioner 's counsel desired to put forward any further representations or arguments, the same should be sent in writing so as to reach the Commission in Delhi by 28th August, 1952, and the Commission should take them into consideration before giving its opinion to the Governor.
On the same day (21st August, 1952) the respondent applied to the High Court under article 226 of the Constitution contending that article 192 thereof was applicable only where a member became subject to a disqualification after he was elected but not where, as here, the disqualification arose long before the election, in which case the only remedy was to challenge the validity of the election before an Election Tribunal.
He accordingly prayed for the issue of a writ of mandamus or of prohibition directing the Commission to forbear from proceeding with the reference made by the Governor of Madras who was not, however, made a party to the proceeding.
On receipt of the rule nisi issued by the High Court, the Commission demurred to the jurisdiction of the court to issue the writs asked for, on the ground that the Commission was not "with in the territory in relation to which the High Court exercised jurisdiction".
A further objection to the maintainability of the application was also raised to the effect that the action of the Governor in seeking the opinion of the Commission could not be challenged in view of the immunity provided under article 361 (1), and that the Commission itself, which had not to "decide" the question of disqualification, but had merely to give its 1148 "opinion", could not be proceeded against under article 226.
On the merits, the Commission contended that article 192 was, on its true construction, applicable to cases of disqualification arising both before and after the election and that both the reference of the question as to the respondent 's disqualification to the Governor of Madras and the latter 's reference of the same to the Commission for its opinion were competent and valid.
The application was heard by Subba Rao J. who overruled the preliminary objections and held that article 192 on its true construction applied only to cases of supervening disqualifications and that the Commission had, therefore, no jurisdiction to deal with the respondent 's disqualification which arose long before the election took place.
He accordingly issued a writ prohibiting the Commission from proceeding with the enquiry in regard to the question referred to it by the Governor under article 192.
The learned Judge, however, granted a certificate under article 132 that the case involved substantial questions of law as to the interpretation of the Constitution, and the Commission has accordingly preferred this appeal.
A preliminary objection was raised by Mr. Mohan Kumaramangalam, who argued the case for the respondent with marked ability, that the appeal brought from the judgment of a single Judge was barred under article 133(3) of the Constitution despite the certificate granted by the learned Judge overruling the same objection which was also raised before him.
It has been urged that, so far as civil matters are concerned, the more comprehensive provisions in article 133(1) (c) for the grant of a certificate of fitness for appeal to the Supreme Court completely overlap article 132(1) which relates only to one specific ground, namely, a substantial question of law being involved as to the interpretation of the Constitution, and that the court 's power, therefore, to grant a certificate of fitness on any ground including the ground referred to above, must be deem ed to arise under article 133(1) (c), with the result that the exercise of such power is excluded by the opening 1149 words of clause (3) of that article which bars an appeal from the judgment, decree or final order of one Judge of a High Court.
The argument was sought to be reinforced by reference to clause (2) of that article and the proviso to article 145(3) both of which contemplate appeals involving substantial questions of law as to the interpretation of the Constitution being brought without a certificate having been obtained under article 132.
The argument has no force.
While it is true that constitutional questions could be raised in appeals filed without a certificate under article 132, the terms of that article make it clear that an appeal is allowed from "any judgment, decree or final order of a High Court" provided, of course, the requisite certificate is given, and no restriction is placed on the right of appeal having reference to the number of Judges by whom such judgment, decree or final order was passed.
Had it been intended to exclude the right of appeal in the case of a judgment etc., by one Judge, it would have been easy to include a reference to article 132 also in the opening words of article 133(3), as in the immediately preceding clause.
If the respondent 's contention were accepted, not only would article 132 become redundant so far as it relates to civil proceedings, but the object of the Explanation to that article, which was designed to supersede the decision of the Federal Court in section Kuppuswami Rao vs The King (1) and thus to secure a speedy determination of constitutional issues going to the root of a case, would be defeated, as the Explanation is not made applicable to the same expression "final order" used in article 133(1).
The whole scheme of the appellate jurisdiction of the Supreme Court clearly indicates that questions relating to the interpretation of the Constitution are placed in a special category irrespec tive of the nature of the proceedings in which they may arise, and a right of appeal of the widest amplitude is allowed in cases involving such questions.
We accordingly overrule the preliminary objection and hold that the appeal is maintainable.
(1) 149 1150 Turning now to the question as to the powers of a High Court under article 226, it will be noticed that article 225 continues to the existing High Courts the same jurisdiction and powers as they possessed immediately before the commencement of the Constitution.
Though there had been some conflict of judicial opinion on the point it was authoritatively decided by the Privy Council in the Parlakimedi case(1) that the High Court of Madras the High Courts of Bombay and Calcutta were in the same position had no power to issue what were known as high prerogative writs beyond the local limits of its original civil jurisdiction, and the power to issue such writs within those limits was derived by the court as successor of the Supreme Court which had been exercising jurisdiction over the Presidency Town of Madras and was replaced by the High Court established in pursuance of the Charter Act of 1861.
The other, High Courts in India had no power to issue such writs at all.
In that situation, the makers of the Constitution, having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently thought it necessary to provide also a quick and inexpensive remedy for the enforcement of such rights and, finding that the prerogative writs which the Courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the States ' sphere, new and wide powers on the High Courts of issuing directions, orders, or writs primarily for the enforcement of fundamental rights, the power to issue such directions, etc., "for any other purpose" being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King 's Bench in England.
But wide as were the powers thus conferred, a two fold limitation was placed upon their exercise.
In the first place, the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued (1) 70 I.A, 129 1151 by the court cannot run beyond the territories subject to its jurisdiction.
Secondly, the person or authority to whom the High Court is empowered to issue such writs must be "within those territories", which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories.
Such limitation is indeed a logical consequence of the origin and development of the power to issue prerogative writs as a special remedy in England.
Such power formed no part of the original or the appellate jurisdiction of the Court of King 's Bench.
As pointed out by Prof. Holdsworth (History of English Law, Vol. 1, p. 212 et seq.) these writs had their origin in the exercise of the King 's prerogative power of superintendence over the due observance of the law by his officials and tribunals, and were issued by the Court of King 's Bench habeas corpus, that the King may know whether his subjects were lawfully imprisoned or not; certiorari, that he may know whether any proceedings commenced against them are conformable to the law; mandamus, to ensure that his officials did such acts as they were bound to do under the law, and prohibition, to oblige the inferior tribunals in his realm to function within the limits of their respective jurisdiction.
See also the introductory remarks in the judgment in the Parlakimedi case(1).
These writs were thus specifically directed to the persons or authorities against whom redress was sought and were made returnable in the court issuing them and, in case of disobedience, were enforceable by attachment for contempt.
These characteristics of the special form of remedy rendered it necessary for its effective use that the persons or authorities to whom the court was asked to issue these writs should be within the limits of its territorial jurisdiction.
We are unable to agree with the learned Judge below that if a tribunal or authority permanently located and normally carrying on its activities elsewhere exercises jurisdiction within those territorial (1) 70 I.A. 129, 140.
1152 limits so as to affect the rights of parties therein, such tribunal or authority must be regarded as "function 'mg" within the territorial limits of the High Court and being therefore amenable to its jurisdiction under article 226.
It was, however, urged by the respondent 's counsel that the High Court had jurisdiction to issue a writ to the Commission at New Delhi because the question referred to it for decision related to the respondent 's right to sit and vote in the Legislative Assembly at Madras and the parties to the dispute also resided in the State of Madras.
The position, it was claimed, was analogous to the court exercising jurisdiction over persons outside the limits of its jurisdiction, provided the cause of action arose within those limits.
Reliance was placed upon the following observations of the Privy Council in the Parlakimedi case(1): "The question of jurisdiction must be regarded as one of substance and that it would not have been within the competence of the Supreme Court to claim juisdiction over such a matter as the present of issuing certiorari to the Board of Revenue on the strength of its location in the town.
Such a view would give jurisdiction to the Supreme Court in the matter of the settlement of rents of ryoti holdings in Ganges between parties not otherwise subject to its jurisdiction, which it would not have had over the Revenue Officer who dealt with the matter at first instance.
" We cannot accede to this argument.
, The rule that cause of action attracts jurisdiction in suits is based on statutory enactment and cannot apply to writs issuable under article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority within the territories" in relation to which the High Court exercises jurisdiction.
Nor is much assistance to be derived from the observations quoted above.
That case arose out of proceedings before a special Revenue Officer for settlement of fair rent for certain holdings within the zemindary estate of Parlakimedi situated beyond the local limits of the original civil jurisdiction of the Madras High Court.
Dissatisfied (1) 70 I.A. 129.
1153 with the settlement made by the Revenue Officer, the ryots appealed to the Board of Revenue which had its offices at Madras.
The appeal was accepted by a single member of the Board who reduced the rent as desired by the ryots.
The zemindar appealed by way of revision to the Collective Board which sanctioned an enhancement.
Thereupon the ryots applied to the High Court for the issue of a writ of certiorari to bring up and quash the proceedings of the Collective Board which passed the order complained of in the town of Madras.
The Privy Council considered the question of jurisdiction from two separate standpoints: "(a) independently of the local civil jurisdiction which the High Court exercises over the Presidency town; or (b)solely by reason thereof, as an incident of the location of the Board of Revenue within the town.
" On question (a), they examined the powers of the Supreme Court at Madras to issue certiorari beyond the Presidency Town under clause 8 of the Charter of 1800, as it was suggested that the High Court succeeded to the jurisdiction and powers of the Supreme Court which had been granted the same powers of issuing prerogative writs as the Court of King 's Bench in England throughout the Province, and they recorded their conclusion thus: " Their Lordships are not of opinion that the Supreme Court would have had any jurisdiction to correct or control a country court of the company deciding a dispute between Indian inhabitants of Ganjam about the rent payable for land in that district.
" Then, dealing with question (b) and referring to their decision in Besants case(1) that the High Courts of Calcutta, Madras and Bombay had power to issue certiorari in the exercise of their local jurisdiction, they held that the principle could not be applied "to the settlement of rent for land in Ganjam merely on the basis of the location of the Board of Revenue as a body which is ordinarily resident or located within (1) 46 I.A. I 76.
1154 the town of Madras, or on the basis that the order complained of was made within the town.
if SO, it would seem to follow that the jurisdiction of the High Court would be avoided by the removal of the Board of Revenue beyond the outskirts of the town and that it would never attach but for the circumstance that an appeal is brought to, or proceedings in revision taken by, the Board of Revenue.
" Then followed the passage already quoted on which the respondent 's counsel laid special stress.
It will thus be seen that the decision is no authority for dispensing with the necessity of the presence or location, within the local limits of the court 's jurisdiction, of the person or authority to whom the writ is to be issued, as the basis of its power to issue it.
Their Lordships considered, in the peculiar situation they were dealing with, that the mere location of the appellate authority alone in the town of Madras was not a sufficient basis for the exercise of jurisdiction whereas both the subject matter, viz., the settlement of rent for lands in Ganjam, and the Revenue Officer authorized to make the settlement at first instance were outside the local limits of the jurisdiction of the High Court.
If the court in Madras were, recognised as having jurisdiction to issue the writ of certiorari to the appellate authority in Madras, it would practically be recognising the court 's jurisdiction over the Revenue Officer in Ganjam and the settlement of rents for lands there, which their Lordships held it never had.
That was the "substance" of the matter they were looking at, and their observations lend no support to the view that if the subject matter or the cause of action and the parties concerned were within the territorial limits of the jurisdiction, the High Court could issue prerogative writs to persons or authorities who are not within those limits.
In any case, the decision did not turn on the construction of a statutory provision similar in scope ' purpose or wording to article 226 of the Constitution, and is not of much assistance in the construction of that article.
1155 It was said that it could not have been contemplated that an inhabitant of the State of Madras, feeling aggrieved by a threatened interference with the exercise of his rights in that State by an authority located in Delhi and acting without jurisdiction, should seek his remedy under article 226 in the Punjab High Court.
It is a sufficient answer to this argument of inconvenience to say that, the language of the article being reasonably plain, it is idle to speculate as to what was or was not contemplated.
Our attention has been called to certain decisions of High Courts dealing with the situation where the authority claiming to exercise jurisdiction over a matter at first instance is located in one State and the appellate authority is located in another State.
It is not necessary for the purposes of this appeal to decide which High Court would have jurisdiction in such circumstances to issue prerogative writs under article 226.
In the view we have expressed above as to the applicability of article 226 to the present case, it is unnecessary to enter upon a discussion of the question whether article 192(1) applies only to members who, having been already elected, have become subject to a disqualification by reason of events happening after their election; but having heard the point fully argued before us, we think it right to express our opinion thereon, especially as both sides have invited us to do so in view of its general importance.
The relevant provisions of the Constitution on which the determination of the question turns are as follows: 190.
(3) If a member of a House of the Legislature of a State (a) becomes subject to any of the disqualifications mentioned in clause (1) of article 191 ; or (b) resigns his seat by writing under his hand addressed to the Speaker or the Chairman, as the case may be, his seat shall thereupon become vacant, 1156 191.
(1) A person shall be disqualified for being chosen as, and for being, a member of the Legislative Assembly or Legislative Council of a State (a) if he holds any office of profit under the Government of India or the Government of any State, specified in the First Schedule, other than an office declared by the Legislature of the State by law not to disqualify its holder; (b) if he is of unsound mind and stands so declared by a competent court; (c) if he is an undischarged insolvent; (d) if he is not a citizen of India, or has voluntarily acquired the citizenship of a foreign State, or is under any acknowledgment of allegiance or adherence to a foreign State; (e) if he is so disqualified by or under any law made by Parliament.
(1) If any question arises as to whether a member of a House of the Legislature of a State has become subject to any of the disqualifications mentioned in clause (1) of article 191, the question shall be referred for the decision of the Governor and his decision shall be final.
(2) Before giving any decision on any such question, the Governor shall obtain the opinion of the Election Commission and shall act according to such opinion.
If a person sits or votes as a member of the Legislative Assembly or the Legislative Council of a State. . when he knows that he is not qualified or that he is disqualified for membership thereof, or that he is prohibited from so doing by the provisions of any law made by Parliament or the Legislature of the State, he shall be liable in respect of each day on which he so sits or votes to a penalty of five hundred rupees to be recovered as a debt due to the State.
As has been stated already, the respondent 's conviction and sentence in 1942 disqualified him both for being chosen as, and for being, a member of the Legislative Assembly under article, 191 (1) (e) read with section 7 of the Representation of the People Act, 1951, 1157 passed by Parliament, the period of five years since his release on 15th August, 1947, not having elapsed before the date of the election.
The respondent having thus been under a disqualification since before his nomination on 15th March, 1952, could he be said to have "become" subject to that disqualification within the meaning of article 192 ? The rival contentions of the parties centred round the true interpretation to be placed on that word in the context of the provisions quoted above.
The Attorney General argued that the whole fasciculus of the provisions dealing with "disqualifications of members", viz., articles.190 to 193, should be read together, and as articles 191 and 193 clearly cover both preexisting and supervening disqualifications, articles 190 and 192 should also be similarly understood as relating to both kinds of disqualification.
According to him all these provisions together constitute an integral scheme whereby disqualifications are laid down and machinery for determining questions arising in regard to them is also provided.
The use of the word "become" in articles 190 (3) and 192 (1) is not inapt, in the context, to include within its scope preexisting disqualifications also, as becoming subject to a disqualification is predicated of "a member of a House of Legislature", and a person who, being already disqualified, gets elected, can, not inappropriately, be said to "become" subject to the disqualification as a member as soon as he is elected.
The argument is more ingenious than sound.
Article 191, which lays down the same set of disqualifications for election as well as for continuing as a member, and article 193 which prescribes the penalty for sitting and voting when disqualified, are naturally phrased in terms wide enough to cover both preexisting and supervening disqualifications; but it does not necessarily follow that articles 190 (3) and 192 (1) must also be taken to cover both.
Their meaning must de end on the language used which, we think, is reasonably plain.
In our opinion these two articles go together and 150 1158 provide a remedy when a member incurs a disqualification after he is elected as a member.
Not only do the words " becomes subject" in article 190(3) and "has become subject" in article 192(1) indicate a change in the position of the member after he was elected, but the provision that his seat is to become thereupon vacant, that is to say, the seat which the member was filling theretofore becomes vacant on his becoming disqualified, further reinforces the view that the article contemplates only a sitting member incurring the disability while so sitting.
The suggestion that the language used in article 190(3) can equally be applied to a pre existing disqualification as a member can be supposed to vacate his seat the moment he is elected is a strained and farfetched construction and cannot be accepted.
The Attorney General admitted that if the word " is " were substituted for "becomes" or " has become ", it would more appropriately convey the meaning contended for by him, but he was unable to say why it was not used.
It was said that on the view that articles 190(3) and 192(1) deal with disqualifications incurred after election as a member, there would be no way of unseating a member who became subject to a disqualification after his nomination and before his election, for, such a disqualification is no ground for challenging the election by an election petition under article 329 of the Constitution read with section 100 of the Representation of the People Act, 1951.
If this is an anomaly, it arises out of a lacuna in the latter enactment which could easily have provided for such a contingency, and it cannot be pressed as an argument against the respondent 's construction of the constitutional provisions.
On the other hand, the Attorney General 's contention might, if accepted, lead to conflicting decisions by the Governor dealing with a reference under article 192 and by the Election Tribunal inquiring into an election petition under section 100 of the Parliamentary statute referrred to above.
For the reasons indicated we agree with the learned Judge below in holding that articles 190(3) and 192(1) 1159 are applicable only to disqualifications to which a member becomes subject after he is elected as such, and that neither the Governor nor the Commission has jurisdiction to enquire into the respondent 's disqualification which arose long before his election.
As, however, we have held that the High Court was not competent under article 226 to issue any prerogative writ to the appellant Commission, the appeal is allowed and the writ of prohibition issued by the learned Judge is quashed.
We make no order as to costs.
Appeal allowed.
Agent for the appellant and the Intervener: G. H. Rajadhyaksha.
| The respondent, who had been convicted and sentenced to rigorous imprisonment for seven years, was elected a member of Madras Legislative Assembly.
At the instance of the Speaker the Assembly, the Governor of Madras referred to the Election Commission, which had its offices permanently located at New Delhi, the question whether the respondent was disqualified and could be allowed to sit and vote in the Assembly.
The respondent thereupon applied to the High Court of Madras under article 226 of the Constitution for a writ restraining the Election Commission from enquiring into his alleged disqualification for membership of the Assembly: Held, that the power of the High Court to issue writs under article 226 of the Constitution is subject to the two fold limitation 1145 that such writs cannot run beyond the territories subject to its jurisdiction and the person or authority to whom the High Court is empowered to issue such writs must be amenable to the jurisdiction of the High Court either by residence or location within the territories subject to its jurisdiction.
The High Court of Madras bad therefore no jurisdiction to issue a writ under article 226 of the Constitution against the Election Commission.
Held further, that articles 190(3) and 192(1) are applicable only to disqualifications to which a member becomes subject after heis elected as such, and neither the Governor nor the Election Commission had jurisdiction to enquire into the respondent 's disqualification which arose long before his election.
A tribunal or authority permanently located and normally carrying on its activities outside the territorial limits of a High Court cannot be regarded as functioning within those territorial limits and therefore amenable to the jurisdiction of that High Court, merely because it exercises jurisdiction within those territorial limits so as to affect the rights of parties therein.
The fact that the matter referred to it for decision related to the opposite party 's right to sit and vote in the Legislative Assembly at Madras and the parties to the dispute resided in the State of Madras could not give jurisdiction to the High Court of Madras to issue such a writ against the Election Commission.
An appeal lies to the Supreme Court under article 132 of the Constitution even from a judgment, decree or final order of a Single Judge of a High Court, provided the requisite certificate is given.
|
iminal Appeal No. 62 of 1951.
Appeal by special leave granted by the Supreme Court of India on the 14th May, 1951, from the Judgment and Order dated the 9th August, 1950, of the High Court of Judicature at Bombay (Bavdekar and Vyas JJ.) in Criminal Appeal No. 319 of 1950 arising out of the Judgment and Order dated the 6th January, 1950, of the Court of the Sub Divisional Magistrate F.C., Ratnagiri City, in Criminal Case No. 77 of 1949.
774 M. C. Setalvad, Attorney General for India (G. N. Joshi and P. A. Mehta, with him) for the appellant.
K. B. Chaudhury for the respondent.
March 13.
The Judgment of the Court was delivered by MAHAJAN J.
The respondents were charged with having committed an offence punishable under section 9(2) read with section 4 of the Bombay Building (Control on Erection) Act, 1948, for commencing the work of erection of a cinema theatre without obtaining the necessary permission from the controller of buildings, Bombay.
The sub divisional magistrate, Ratnagiri, held that the Act not having been validly extended to Ratnagiri, no permission of the controller of buildings was necessary for the construction.
He accordingly acquitted them.
On appeal by the State Government, the order of acquittal was maintained by the High Court.
This appeal is before us by special leave from the concurrent orders of acquittal.
Special leave was granted on the Attorney General for India undertaking on behalf of the State Government of Bombay that whatever the decision of the court might be, no proceedings will be taken against the respondents in respect of the subject matter under appeal.
At the hearing of the appeal it was made plain by the learned Attorney General that no adverse consequences will flow to the respondents or to their building being completed, by the acquittal order being pronounced as bad, and that the State Government will not in any way interfere with the respondents when they take steps to complete the building, the construction of which was commenced without the permission of the controller.
The State Government merely wants to have the question of law decided as a test case because the decision of the High Court, if left unchallenged, would have far reaching effects.
The facts giving rise to the prosecution of the respondents, shortly stated, are these: There was in force in the State of Bombay an Ordinance, Bombay 775 Building (Control on Erection) Ordinance, 1948.
It was applicable to certain areas specified in the schedule.
The district of Ratnagiri was not one of the areas therein specified.
Sub section (4) of section (1) of the Ordinance empowered the provincial government by notification in the official gazette to extend to any other area specified in such notification its provisions.
It further empowered the provincial government to direct that it shall apply only in respect of buildings intended to be used for such purpose as may be specified in the notification.
On 15th January.
1948, the Government of Bombay issued the following notification: " In exercise of the powers conferred by sub section (4) of section 1 of the Bombay Building (Control on Erection) Ordinance, 1948 (Ordinance No. I of 1948), the Government of Bombay is pleased to direct that the said ordinance shall also extend to all areas in the province of Bombay other than the areas specified in the schedule to the said Act and that it shall apply to said areas only in respect of buildings intended to be used for the purpose of cinemas, theatres and other places of amusement or entertainment.
" The consequence of this notification was that in the district of Ratnagiri no cinema building could be commenced without the permission of the controller after that date.
Ordinance I of 1948 was repealed by Act XXXI of 1948, The Bombay Building (Control on Erection) ' Act, 1948".
It was made applicable to areas specified in the schedule.
Sub section (3) of section I authorized the provincial government by notification in the official gazette to direct that it shall also extend to any other.
areas specified therein.
It further authorized the provincial government to direct that it shall apply only in respect of buildings intended to be used for such purposes as may be specified in the notification.
By section 15(1) of the Act it was pro vided that `` The Bombay Building (Control on Erection) Ordinance, 1948, is hereby repealed and it is hereby 776 declared that the provisions of sections 7 and 25 of the Bombay General Clauses Act, 1904, shall apply to the repeal as if that Ordinance were an enactment.
" The respondents started constructing a cinema at Ratnagiri on 15th August, 1948, after the commencement of Act XXXI of 1948 without obtaining the permission of the controller of buildings as required by the Act under the impression that the Act had application only to areas specified in the schedule and the district of Ratnagiri not having been specified in the schedule, the provisions of the Act had no application to that area.
As above stated, they were prosecuted for committing an offence under section 9(2) read with section 4 with the results above mentioned.
The order of acquittal was based on the ground that although the notification extended the scope of the ordinance to area, other than those which were mentioned specifically in the schedule thereto, it did not extend to those areas the provision, of the Act in spite of the application of the provisions of section 25 of the Bombay General Clauses Act.
In Judgment, the construction placed by the High Court on the language of section 15 is erroneous and full effect has not been given to its provisions or to the provisions of section 25 of the Bombay General Clauses Act.
We think on a true construction of section 15 of the Act and section 25 of the Bombay General Clauses Act, the notification issued on 15th January, 1948, under the ordinance continued in force under Act XXXI of 1948 and that by it the provisions of the Act stood extended to other areas in the State to the extent indicated in the notification.
Section 25 of the Bombay General Clauses Act, 1904, provides `` Where any enactment is, after the commencement of this Act, repealed and re enacted by a Bombay Act, with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule, bye law or form made or issued under the repealed enactment shall, so far as it is not inconsistent with the provisions re enacted, 777 continue in force and be deemed to have been made or issued under the provisions so re enacted unless and until it is superseded by any appointment, notification, order, scheme, rule, bye law or form made or issued under the provisions so re enacted.
" It cannot be contended that the notification was inconsistent with the provisions of Act XXXI of 1948.
It is clearly in accordance with its scheme and purpose.
The High Court did not combat the proposition that in view of the provisions of section 25 of the Bombay General Clauses Act the notification continued in force after the coming into force of the Act.
It, however, held that even if the notification was taken as having been issued under Act XXXI of 1948, the notification merely extended the ordinance to these areas and not the Act.
In the opinion of the High Court, the word "Act " instead of " Ordinance " could not be read in the words of the notification by the force of section 25 of the Bombay General Clauses Act and the notification literally construed, only extended the ordinance to those areas.
It was considered that if the intention was to extend the Act to these areas, such an intention could only be carried out by enacting in Act XXXI of 1948 a proviso like the one enacted in the Cotton Cloth and Yarn (Control) Order, 1945, or by use of language similar to the one used in section 9 of the Bombay General Clauses Act, 1904.
The proviso in the Cotton Cloth and Yarn (Control) Order is in these terms:" Provided further any reference in any order issued under the Defence of India Rules or in any notification issued thereunder to any provision of the Cotton Cloth and Yarn (Control) Order, 1943, shall, unless a different intention appears, be construed as reference to the corresponding provision of this Order.
" We do not find it possible to support this line of reasoning.
It appears to us that the attention of the learned Judges was not pointedly drawn to the concluding words of section 15 (1) of the Act.
It is specifically provided therein that the provisions of 778 sections 7 and 25 of the Bombay General Clauses Act shall apply to the repeal as if the ordinance were an enactment.
The ordinance by use of those words was given the status of an enactment and therefore the word "ordinance" occurring in the notification has to be read accordingly and as extending the Act to those areas, and unless that is done, full effect cannot be given to the 'Concluding words used in section 15(1) of the Act.
The concluding words of section 15(1) of the Act achieve the purpose that was achieved in the Cotton Cloth and Yarn (Control) Order by the "proviso.
" By reason of the deeming provisions of section 15, the language used in the notification extending the ordinance to those areas as a necessary consequence has the effect of extending the operation of the Act to those areas.
When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion.
[Vide Lord Justice James in Ex parte Walton : In re Levy(1)].
If the purpose of the statutory fiction mentioned in section 15 is kept in view, then it follows ,that the purpose of that fiction would be completely defeated if the notification was construed in the literal manner in which it has been construed by the High Court.
In East End Dwellings Co. Ltd. vs Finsbury Borough Council(2), Lord Asquith while dealing with the provisions of the Town and County Planning Act, 1947, made reference to the same principle and observed as follows: " If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. .
The statute says that you must imagine a certain state of affairs; it does not (1) , at P. 756, (2) 779 say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.
" The corollary thus of declaring the provisions of section 25 of the Bombay General Clauses Act applicable to the repeal of the ordinance and of deeming that ordinance an enactment is that wherever the word "ordinance" occurs in the notification, that word has to be read as an enactment.
For the reasons given above we are satisfied that the High Court was in error in holding that the notification only extended the provisions of the ordinance to Ratnagiri district and not the provisions of Act XXXI of 1948 to that area.
It may, however, be observed that the manner adopted by the legislature in keeping alive the notifications issued under the ordinance by use of somewhat involved language in matters where the rights of the citizens regarding the construction of buildings were being affected was not very happy.
It has certainly led three judges to think that the intention of the legislature was not brought out by the language.
People who are not lawyers may well be misled into thinking that the notification issued under the ordinance has terminated with its repeal and not having been re issued under the Act, the provisions of which again in clear language provide that it only extends to areas specified in the schedule and which gives power to extend it, that those areas are excluded from the scope of the Act.
It would have been much simpler if the legislature made its intention clear by use of simple and unambiguous language.
Because of the undertaking given by the learned Attorney General not to proceed any further in this matter, it is not necessary to set aside the acquittal order of the respondents, which will remain as it stands.
A appeal allowed.
Acquittal not set aside.
| The Bombay Building (Control on Erection) Ordinance of 1948 applied to certain areas mentioned in the Schedule to the Ordinance, and in exercise of the powers vested in it by the Ordinance the Government extended its provisions to certain other areas including Ratnagiri in respect of buildings intended to be used for cinemas and other places of entertainment, by a notification of the 15th January,.
This Ordinance was repealed by the Bombay Building (Control on Erection) Act of 1948 the provisions of which were similar to those of the earlier Ordinance.
Section 15(1) of the Act repealed that Ordinance and declared that " the provisions of sections 7 and 25, Bombay General Clauses Act, 1904, shall apply to the repeal as if that Ordinance were an enactment.
" Held, reversing the judgment of the Bombay High Court, that on a true construction of section 15(1) of the above said Act and section 25 of the Bombay General Clauses Act, 1904, the notification issued on the 15th January, 1948, under the Ordinance continued in force under the Act of 1948 and that by it the provisions of the Act stood extended to other areas in the State including Ratnagiri to the extent indicated in the notification.
Ex parte Walton: In re Levy and East End Dwelling Co. Ltd. vs Finsbury Borough Council ([1952] A.C. 109) referred to.
|
Appeal No. 8 of 1953.
Appeal by special leave from the decision dated 16th August, 1951, of the Labour Appellate Tribunal of India, Calcutta, in Appeal No. 43 of 1951 (Cal.).
C. K. Daphtaru, Solicitor General for India, (Sri Narain Andley, with him) for the appellant.
C. P. Varma for the respondent.
March 16.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal by special leave from a decision of the Labour Appellate Tribunal 'of India, Calcutta, confirming an award made by the Regional Conciliation Board (Textiles & Hosiery), Kanpur, in an industrial dispute between the appellants and the respondents.
781 The respondents 2, 3 and 4 were employees of the appellants, respondent 2 was employed in the clerical cadre while respondents 3 and 4 were employed as wrapping boy and piecer respectively and their service conditions were governed by the standing orders of the Employers ' Association of Northern India, Kanpur, of which association the ' appellants were members.
There was a theft in the canteen within the mill premises between the night of January 6 and 7, 1950, and some money belonging to the appellants invested in the canteen account was stolen from the safe.
A report of the theft was made to the police authorities and an investigation was made by the police, as well as the appellants in the matter with no result.
The management of the appellants thereafter took action against one J. P. Gurjar, who was in charge of the canteen in connection with the losses of money from the account of the canteen and after the completion of the enquiries terminated his services.
An industrial dispute in respect of the non employment of the said J. P. Gurjar arose between the parties which dispute was at the material time taken in appeal before the Industrial Court (Textiles & Hosiery), Kanpur.
During the pendency of those proceedings, some time in August, 1950, the respondent 4 made a confession in regard to the said theft implicating the respondents 2 and 3 also therein.
On the 29th August, 1950, the management of the appellants presented to the respondents 2,3 and 4 charge sheets in respect of the said theft and suspended them on the 30th August, 1950, from their service.
They also made an application on the 2nd September, 1950, to the Additional Regional Conciliation Officer, Kanpur, asking for permission to dismiss the respondents 2, 3 and 4.
The Additional Regional Conciliation Officer, Kanpur, instituted an enquiry, heard the respondents 2,3 and 4, considered the evidence which was led before him by the appellants as well as the respondents 2,3 and 4 and made an order on the 12th October, 1950, according to the appellants permission for the dismissal of the 782 respondents 2, 3 and 4.
The respondents 2, 3 and 4 were accordingly dismissed from their employ by the appellants with effect from the 13th October, 1950.
An industrial dispute thereupon arose between the appellants and respondents 2, 3 and 4 in respect of the non employment of respondents 2,3 and 4 and respondent 1, a registered trade union, of Which the respondents 2, 3 and 4 were members, ultimately moved the Regional Conciliation Board (Textiles and Hosiery), Kanpur, on the 1st November, 1950, challenging the propriety and bona fides of the appellants in terminating the services of respondents 2, 3 and 4.
The appellants filed their written statement on the 25th November, 1950, contending inter alia that the dismissal was fully justified, regular and proper, having ' been made in accordance with the permission accorded by the Additional Regional Conciliation Officer.
The only issue which was canvassed before the Regional Conciliation Board was whether any or all of the three workmen named in the application dated the 1st November, 1950, has/have been wrongfully dismissed and if so, to what relief is he/they entitled.
The Board consisted of three members, Shri R. P. Maheshwari, Chairman, and Shri B. B. Singh and Shri J. K. Bhagat, Members.
Shri J. K. Bhagat was not present on the last date of the hearing and the award was therefore signed on the 20th April, 1951, by Shri R. P. Maheshwari and Shri B. B. Singh.
Under the terms of the award the Board held that the dismissal was wrongful and that the respondents 2, 3 and 4 were entitled to reinstatement as also to the full wages, including dearness allowance from the date of their suspension to the date they were taken back on duty.
The appellants preferred an appeal to the Labour Appellate Tribunal of India, Calcutta.
The appeal was heard on the 16th August, 1951, and the Labour Appellate Tribunal dismissed the appeal of the appellants.
The appellants obtained special leave from this Court and filed the present appeal.
783 Two contentions were urged by Shri C. K. Daphtary who appeared for the appellants before us (1) that the award was void and inoperative as it was made by only two members of the Board, the third, member, Shri J. K. Bhagat not having been present at the last hearing and not having signed the same and (2) that the Additional Regional Conciliation Officer having given the written permission for dismissal of respondents 2, 3 and 4 no industrial dispute could arise by reason of the non employment of respondents 2, 3 and 4 and the Regional Conciliation Board had therefore no jurisdiction to entertain the application made before it by respondent 1 on behalf of the respondents 2, 3 and 4 and the award of the Regional Conciliation Board ordering the reinstatement of respondents 2, 3 and 4 was therefore without jurisdiction, void and inoperative and the Labour Appellate Tribunal was in error in confirming the same.
In support of his first contention Shri C. K. Daphtary relied upon clause 4 and clause 7, sub clause (3) of the G. N. No. 781 (L)/XVIII, dated 10th March, 1948, issued by the United Provinces Government regarding the constitution of Regional Conciliation Boards and Industrial Courts for the settlement of industrial disputes within the State.
Clause 4 " No business may be transacted at any meeting of any Board unless all the three members are present Clause 7 (3) " Where no amicable settlement can be reached on one or more issues the Board, if all the members thereof agree or if they do not so agree, the majority of,the members agreeing or if no two members agree, the Chairman alone, shall record an award and the reasons for such award, on the issues on which the parties were unable to reach an amicable settlement." Shri C. K. Daphtary therefore urged that Shri J. K. Bhagat not having been present at the last meeting of the Board and not having signed the 784 award the award could not be lawfully made by the Chairman and the other member who were present and who signed the award and the award was therefore void and inoperative.
Shri C. P. Varma who represented the respondent before us however drew tour attention to the Government Order No. 388(11)/ XVIII/37 (LL) /50 dated 2nd March, 1951, which amended the above clauses 4 and 7(3).
Clause 4 as amended provides: " (1) Notice of every meeting of the Board shall be given to the members by the Chairman in advance.
( 2) If apart from the Chairman either or both the other members fail to attend any meeting of the Board of which notice has been given to them, the Chairman may transact the business ' of the Board without the presence of the absent member or members ; and no such business or proceedings, of the Board shall be held invalid merely by reason of the fact that either one or both of the members were not present at the meeting.
" Clause 7 (3) as amended provides: "Where no amicable settlement can be reached on one or more issues, if all the members present agree the Board or if they do not so agree the majority of the members agreeing 'or if no two members present agree or if only the Chairman is present, he alone, shall record an award and the reasons for such award on the issues on which the parties were unable to reach an amicable settlement." These amendments in the clauses 4 and 7 (3) are enough in our opinion to repel the contention of Shri C. K. Daphtary that the absence of Shri J. K. Bhagat from the last meeting and also his non participation in the making and signing of the award rendered.the award void and inoperative.
The Board was empowered under the amended clauses 4 and 7(3) to act in the absence of Shri J. K. Bhagat and the award as it was made and signed by the two remaining members, viz., Shri R. P. Maheshwari and Shri B. B. Singh, was lawful and binding on the parties.
785 In support of his second contention Shri C. K. Daphtary relied upon clauses 23 and 24 of the Government Notification dated the 10th March, 1948, above referred to.
Clause 23 : " Save with the written Permission of the Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned irrespective of the fact whether an enquiry is pending before a Regional Conciliation Board or the Provincial Conciliation Board or an appeal has been filed before the Industrial Court, no employer, his agent or manager, shall discharge or dismiss any workmen during the continuance of an enquiry or appeal and pending the issue of the orders of the State Government upon the findings of the said Court. . .
Clause 24: "(1) Except as hereinbefore provided every order made or direction issued under the provisions of this Order shall be final and conclusive and shall not be questioned by any party thereto in any proceeding. . .
Shri C. K. Daphtary contended that the order made by the Additional Regional Conciliation Officer on the 12th October ' 1950, giving the appellants permission to dismiss respondents 2, 3 and 4 was final and conclusive in regard to the appellants ' right to dismiss them from their employ and their dismissal accordingly by the appellants could not be the foundation of any industrial dispute which could be referred to the Regional Conciliation Board at the instance of respondent 1.
He further contended that if no industrial dispute could thus arise the Regional Conciliation, Board had no jurisdiction to entertain the same and the award made by the Board was therefore without jurisdiction, void and inoperative and could not also be confirmed by the Labour Appellate Tribunal.
We are unable to accept this contention.
The Government Notification dated 10th March, 1948, was issued by the Governor of the United Provinces in exercise of the powers conferred by clauses (b), (c), 786 (d) and (g) of section 3 and section 8 of the ,United Provinces .
It provided for the constitution by the Provincial Government of such number of Conciliation Boards as might be deemed necessary for the settlement of industrial disputes consisting of three members of which one was to be the Conciliation Officer for the area, one was to be representative of the employers and one was to be the representative of workmen, the Conciliation Officer for the area being the Chairman of the Board.
The order provided for the mode in which industrial disputes may be referred to the Board for enquiry and the manner in which the enquiry was to be conducted.
It also provided for the constitution by the Provincial Government of such number of Industrial Courts as it might be necessary consisting of a President assisted by such equal number of assessors as the President might determine representing employers and employees.
Provision was made for appeals to such Industrial Courts from the awards of the Board and also for the hearing of the said appeals.
After making further provision for the procedure to be adopted before the Boards as well as the Industrial Courts, the Order by clause 23 above mentioned imposed a ' ban on the discharge or dismissal of any workman by the employer, his agent or manager during the pendency of an enquiry before the Regional Conciliation Board or the Provincial Conciliation Board or of an appeal before the Industrial Court except with the written permission of the Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned and by clause 24 made every order or direction issued under the provisions of the said Government Order final and conclusive except as thereinbefore provided.
It is clear that clause 23 imposed a ban on the discharge or dismissal of any workman pending the enquiry of an industrial dispute before the Board or an appeal before the Industrial Court and the employer, his agent or manager could only discharge or dismiss 787 the workman with the written permission of the Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned.
Even if such) written permission was forthcoming the employer, his I agent or manager might or might not discharge or, dismiss the workman and the only effect of such written permission would be to remove the ban against the discharge or dismissal of the workman during the pendency of those proceedings.
The Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned would institute an enquiry and come to the conclusion whether there was a prima facie case made out for the discharge or dismissal of the workman and the employer, his agent or manager was not actuated by any improper motives or did not resort to any unfair practice or victimisation in the matter of the proposed discharge or dismissal of the workman.
But he was not entrusted, as the Board or the Industrial Court would be, with the duty of coming to the conclusion whether the discharge or dismissal of the workman during the pendency of the proceedings was within the rights of the employer, his agent or manager.
The enquiry to be conducted by the Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned was not an enquiry into an industrial dispute as to the non employment of the workman who was sought to be discharged or dismissed, which industrial dispute would only arise after an employer, his agent or manager discharged or dismissed the workman in accordance with the written permission obtained from the officer concerned.
This was the only scope of the enquiry before the Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned and the effect of the written permission was not to validate the discharge or dismissal but merely to remove the ban on the powers of the 'employer, his agent or manager to discharge or dismiss the workman during the pendency of the proceedings.
Once such written permission was granted by him that 102 788 ,order made or direction issued by him was to be final land conclusive and was not to be questioned by any party thereto in any proceedings.
The only effect of )clause 24(1) was to prevent any party to the pending proceedings from challenging the written permission thus granted by the officer concerned Such written permission could not be made the subject matter of any appeal at the instance of either party and both the parties would be bound by the order made or direction issued by the officer concerned so far as it gave or refused the permission to the employer, his agent or manager in the matter of the proposed discharge or dismissal of the workman.
This was the only scope of the provisions of clauses 23 and 24 (1) above.
mentioned. ' Once the written permission was granted by the officer concerned, the ban against the discharge or dismissal of the workman would be removed and the employer, his agent or manager could in the exercise of his discretion discharge or dismiss the workman but in that event an industrial dispute within the meaning of its definition contained in section 2(k) of the , would arise and the workmen who had been discharged or dismissed would be entitled to have that industrial dispute referred to the Regional Conciliation Board for enquiry into the Same.
That right of the workman to raise an industrial dispute could not be taken away in the manner suggested by Shri C. K. Daphtary by having resort to the provisions of clauses 23 and 24(1) aforesaid.
That right was given to the workman by the terms of the , and the U.P. , XXVIII of 1947, and would remain unaffected by any of the provisions hereinbefore referred to.
We are therefore, of the opinion that this contention of Shri C. K. Daphtary also fails.
We may before concluding advert to one circumstance and that is that even though the Labour Appellate Tribunal rightly confined its jurisdiction to 789 determining substantial questions of law involved in the appeal, it nevertheless observed that even on the) facts the conclusions of the Board were perfectly justified and there was no substance in the appeal on merits as well.
The appellants were not heard at all on merits; and it was hardly legitimate for the Labour, Appellate Tribunal suo motu to consider the merits of the appeal and arrive at a finding in regard to the same. ' If at all the Labour Appellate Tribunal bad any jurisdiction in regard to the merits it was incumbent upon it to have heard the appellants in regard to the merits before arriving at a conclusion in regard to the same.
The result is that this appeal fails and must be dismissed with costs.
Appeal dismissed.
Agent for the appellant : section section Shukla.
| Under the provisions of clauses 4 and 7 (3) of Notification No. 781 (L)/XVIII issued by the United Provinces Government on March 10, 1948, the absence of one of the members of the Regional Conciliation Board on the last date of hearing and his nonparticipation in the making and signing of the award would not render the award void or inoperative.
The dismissal of workmen and their non employment would not cease to be An industrial dispute merely because the Regional Conciliation Officer had given written permission to the employer to dismiss them under clause 23 of the U.P. Government Notification of March 10, 1948.
Such permission does not validate the dismissal but only removes the ban on the right of the employer, his agent or manager to dismiss the workmen concerned during the pendency of proceedings relating to an industrial dispute.
|
Appeal No. 139 of 1962.
Appeal from the Judgment and Decree dated the 17th March, 1950, of the High Court of Judicature at Madras (Horwill and Balakrishna Ayyar JJ.) in O.S.A. No. 34 of 1947, arising out of 791 the Judgment and Decree dated the 18th April, 1947, of the said High Court (Clark J.) in the exercise of the Ordinary Original Civil Jurisdiction of the High Court in C. section No. 208 of 1940.
V. Rangachari (K. Mangachary, with him) for the appellant.
K. Krishnaswami Iyengar (K. Parasuram, with him) for the respondent.
March 20.
The Judgment of the Court was delivered by MAHAJAN J.
The dispute in this appeal is between a constituent and a firm of stock brokers.
Some time before April, 1936, the plaintiff, then a young man, came into possession of property worth about 2 lakhs of rupees on a partition between him and his brothers.
In the hope of getting rich by obtaining quick dividends by speculating on the stock exchange be, through the defendant firm and certain other stockholders, entered into a series of speculative transactions and it seems he did not fare badly in the beginning.
But subsequent events tell a different tale.
In 1937, two iron and steel companies in North India, vie., Indian Iron & Steel Co. Ltd., and the Bengal Iron & Steel Co. Ltd., merged into one concern and a new issue of shares was made.
The scheme was that for every five shares which a person held in the Indian Iron Co. Ltd. on 22nd April, 1937, one fully paid up share would be given to him at a price of Rs. 25.
The market price at the time this scheme was announced was about Rs. 55 per share.
A wave of speculation followed this announcement and there was a boom in the market.
Prices of Indian Iron shares were going up to unreal heights.
To stabilize the situation thus created by heavy speculation, three members of the Committee of the Calcutta Stock Exchange presented a petition to the Committee on 5th April, 1937, to close the Calcutta Stock Exchange 792 for a while.
On the same evening plaintiff 's stockbroker Annamalai Chettiar, who was carrying on business in firm name Trojan & Co., had telephonic conversation with one Ramdev Chokani, a member of the Calcutta Stock Exchange, on this subject and from this conversation he gathered that a sharp fall in the prices of Indian Irons was likely.
At that time Annamalai Chettiar had on his bands some 5,000 of these shares.
Shortly after this conversation and after business hours the same night, between the hours of 7 30 and 8 30, Annamalai Chettiar rang up the plaintiff and suggested to him that it would be a good thing for him to buy these shares.
The youthful plaintiff in his anxiety to got rich quickly accepted the suggestion and purchased these shares, some at Rs. 77 and others at Rs. 77 4 0.
Another firm of brokers, Ramlal & Co., had also in their hands another 4,000 of these shares.
They too found in the plaintiff a ready buyer.
They also contacted him on the phone after Annamalai had done so, and sold him 4,000 shares that they held.
Out of the lot which the plaintiff purchased from the defendants he sold 1,300 shares to Ramanathan Chetti at cost price.
On the 6th April the Committee of the Calcutta Stock Exchange Association passed a resolution closing the Stock Exchange on the 8th and 9th April.
From the 6th April onwards the market sagged and the prices came down, at first gradually and then literally at a, run.
The result of it was that the plaintiff had to sell at a very heavy loss.
The defendants made demands on the plaintiff for the price of those shares.
Between 5th April and 20th April, 1937, he made payments to defendants of various amounts totalling Rs. 60,000.
A lot of 700 shares was sold by the plaintiff to Pilani & Co. and on 19th April, 1937, he instructed the defendants.for sale of the remaining 3,000 shares at the best price obtainable.
The defendants sold 2,000 shares on 20th April, 1937, for prices ranging between Rs. 47 4 0 to 793 Rs.44 12 0 per share.
The remaining 1,000 shares were sold by him through Messrs. Ramlal & Co. at Rs. 42 8 0 per share on 22nd April, 1937.
The result of it was that on 22nd May, 1937, when the accounts between the plaintiff and the defendants were settled it was found that plaintiff was heavily indebted to them in the sum of Rs. 51,712 7 0 and the credit balance of Rs. 64,000 that he had with the defendants at the end of March, 1937, had been wiped off.
For the amount found due he passed a promissory note in favour of defendants, Exhibit P 33.
After giving credit for payments received on the promissory note the defendants filed a suit against him (O.S. 150 of 1937) on the Original Side of the Madras High Court and obtained an ex parte interim order for attachment before judgment and attached plaintiff 's movable and immovable properties at Madras, and also at Kottaiyur in Ramnad district.
Owing to the attachment proceedings the firm of Ramlal & Co. filed a petition for adjudication of the plaintiff as an insolvent.
On 22nd September, 1937, Trojan & Co. also filed a petition for the same relief.
An order adjudicating the plaintiff an insolvent was made by the High Court on 5th October, 1937, on the petition of Ramlal & Co. In the course of the insolvency proceedings defendants tendered proof of their claim on the promissory note, Exhibit P 33.
The Official Assignee having acquired knowledge about the telephonic conversation that had passed between Annamalai Chettiar and Ramdev Chokani on the evening of the 5th April, 1937, came to the conclusion that the insolvent had been a victim of a fraud perpetrated by the defendants and dismissed their claim.
Defendants firm was guilty of fraud both in respect of the failure to disclose the fact that the Indian Iron shares or most of them be longed to one of its partners, Annamalai Chettiar, and also on account of the failure on its part to disclose its knowledge of the likelihood of a slump in the market because of the notice given by its members to close the Stock Exchange.
794 On an application made to the High Court against the order of the Official Assignee it was set aside by Mockett J. and he directed that the claim of the defendants be disposed of on a court motion, the claim being heard as if it were a suit.
In pursuance of this direction Trojan and Co. on 29th September, 1938, filed an application in the High Court, No. 313 of 1938.
The Official Assignee representing the estate of the plaintiff denied its liability on the promissory note on the ground of fraud.
On 15th March, 1940, Somayya J. dismissed the claim of the defendants.
He held the defendants firm guilty of fraud in both respects.
From this there was an appeal which was dismissed on 12th August, 1942.
The defendants applied for leave to appeal to His Majesty in Council but leave wag refused.
Defendants then applied to the Privy Council for special leave and that application was also dismissed some time in October, 1943.
On the 28th September, 1940, when the appeal from the decision of Somayya J. was still pending, the Official Assignee as representing the estate of the plaintiff filed the suit out of which this appeal arises against Trojan & Co. for an account of the transactions between himself as principal and the defendants as agents and claiming damages for loss sustained by him and for various other reliefs.
The suit embraced in particular claims in respect of four transactions.
The first related to the 5,000 Indian Iron shares.
The second referred to a transaction of Associated Cements.
On 22nd March,1937, the plaintiff had sold through the defendants 5O shares in Associated Cements at Rs.180 8 0 per share.
On 30th March, 1937, he had similarly sold a further 200 shares in Associated Cements at Rs. 183 per share.
The plaintiff did not have on hand even a single share in Associated Cements.
It became necessary for him therefore to "cover the sales".
On 21st July, 1937, defendants purchased on plaintiff 's account 100 shares at Rs. 161 12 0 per share.
On 1st September, 1937, they purchased a further 150 shares at 795 Rs. 151 a share.
The difference between the prices at which these shares had been sold and bought amounted to Rs. 6,762 8 0 and for this amount the defendants gave the plaintiff credit by adjusting it towards the promissory note account.
In respect of this transaction the case of the Official Assignee was that the purchase which had been made by the defendants was not only unauthorized, but contrary to instructions and was not valid and binding on the plaintiff as it had been made after the commencement of the insolvency.
No claim was made in the alternative that if this contention failed, the plaintiff was entitled to recover the amount credited towards the promissory note on the ground of failure of consideration.
The third transaction related to 300 shares in Tatas, and the fourth one was in respect of shares in Ayer Mani Rubber Co. The last claim was abandoned at the trial and the claim on the third transaction was decreed in favour of the plaintiff and the correctness of the order of the trial judge was not canvassed in the appeal before the High Court.
The amount decreed as regards these 300 shares was in the sum of Rs. 1,050.
The defendants denied liability for the entire claim and pleaded that they were not guilty of any fraud and that in any case the plaintiff was not entitled to claim any damage, as he could have easily sold away all his shares soon after his purchase without incurring any loss, and that he retained them in order to make profit.
The suit was first heard by Bell J. who decreed the claim of the plaintiff on 9th March, 1943.
The defendants appealed.
The appellate court set aside the decision of Bell J. and 'remanded the suit for fresh disposal on 26th August, 1944.
Meantime, that is to say, on 21st February, 1944, the adjudication of the plaintiff was annulled and on his application he was brought on the record in the place of the Official Assignee and he continued the suit.
Clark J. who tried the suit after remand gave a decree in favour of 103 796 the plaintiff for the sum of Rs. 61,787 9 0 with interest at the court rate of six per cent.
per annum from 1st September, 1937, until payment or realization with costs.
Against this decree the defendants preferred an appeal.
The appellate Bench modified the decree of Clark J., and reduced the amount of the decree by a sum of Rs. 9,100.
Each party was made to pay proportionate costs throughout.
Leave to appeal to this court against the decree was granted and the appeal is now before us under the certificate so granted.
As above stated, the claim in respect of Ayer Mani Rubber shares was abandoned at the trial and the claim on the third transaction relating to 300 shares in Tatas was decreed for the sum of Rs. 1,050 and the correctness of this order was not canvassed in the appeal before the High Court.
The two claims discussed in that court were in respect of the trans action of 5,000 Indian Iron shares and in respect of the transaction made in Associated Cements.
The dispute before us so far as the Indian Iron shares are concerned has narrowed down to the question of quantum of damages in respect of 3,000 out of the 5,000 shares that were transferred by the defendants to the plaintiff on the night of the 6th April, 1937, 1,300 out of these shares having been sold at cost price by the plaintiff the day after the purchase, and 700 having been sold to Pilani & Co., and regarding which the plaintiff 's claim was rejected in the High Court and plaintiff preferred no further appeal.
The finding of Somayya J., that the defendants firm was guilty of fraud both in respect of the failure to disclose the fact that the Indian Iron shares or most of them belonged to one of its partners, Annamalai Chettiar, and also on account of its failure to disclose its knowledge of the probable slump in the market by reason of the notice given by three members of the Stock Exchange to temporarily close it, was not contested before Clark J., and it was conceded that that finding had become final.
The main ques tion canvassed at this trial was whether the plaintiff 797 had suffered any damage as a consequence of this fraud and if so, how were the damages to be measured.
In the plaint plaintiff claimed that he was entitled to be recompensed for all loss and damage which he had suffered.
A sum of Rs. 45,042 9 0 was credited in his account in respect of the sale of 3,000 shares made on 20th and 22nd April, 1937.
He claimed the whole of this amount as damages on this count; in other words, according to the plaintiff, the damage suffered by him was to be measured according to the difference between the purchase price of the shares and the price for which they were ultimately sold.
The shares were bought on 5th April at Rs. 77 and Rs. 77 4 0 and sold at prices ranging between Rs. 42 8 0 and Rs. 47 4 0 on the 20th and 22nd April, 1937.
This method of measuring damages was successfully challenged by the defendants before the trial judge.
Clark J., in spite of holding that the measure of damages in a case like this could not be as suggested by the plaintiff, estimated the damage suffered by him at the difference between the rate at which the plaintiff purchased the shares and the rate at which he actually sold them, on the ground that the price at which he sold them was more than the fair value of these shares realizable on the 6th April, 1937, between bona fide purchasers and sellers having knowledge of the real state of affairs.
Before the appeal Bench of the High Court it was contended that the trial judge was in error in his assessment of the real value of these shares on 5th April, 1937, and that in any case they could not be valued at four different rates.
It was urged that.
damages had been over estimated.
This contention was negatived and it was held that in the circum stances of this case it could not be said that the plaintiff acted unreasonably in holding on to the shares for the time that be did and that the defendants had by their own double dealings placed the plaintiff in a difficult position.
The learned counsel for the appellant reiterated before us the contentious raised by him in the High 798 Court and urged that the true measure of damages in actions like this is the difference between the price paid and the real value of the shares at the time of the transaction, and that any loss caused to the plaintiff by his retaining the shares after that date could not be decreed.
It was strenuously contended that had the plaintiff sold the remaining shares like the 1,300 he sold, he would not have suffered any damage whatsoever, as the market price of these shares on the 6th and 7th was not below the cost price.
It was said that the loss that the plaintiff suffered was merely due to the circumstance that he retained the shares for a fortnight, and was not as a consequence of the fraud.
Lastly, it was contended that even if it could be held that the market on the 6th and 7th was affected by the very fact concealed from the plaintiff, its effect disappeared by the 10th April, when the fact became fully known and damage should have been assessed on the difference between the market price of these shares which ruled at Rs. 62 per share on 10th April, 1937, and their cost price.
Now the rule is well settled that damages due either for breach of contract or for tort are damages which, so far as money can compensate, will give the injured party reparation for the wrongful act and for all the natural and direct consequences of the wrongful act.
Difficulty however arises in measuring the amount of this money compensation.
A general principle cannot be laid down for measuring it, and every case must to some extent depend upon its own circum stance.
It is, however, clear that in the absence of ,any special circumstances the measure of damages cannot be the amount of the loss ultimately sustained by the representee.
It can only be the difference between the price which he paid and the price which he would have received if he had resold them in the market forthwith after the purchase provided of course that there was a fair market then.
The question to be decided in such a case is what could the plaintiff have obtained if he had resold forthwith that which he bad been induced to purchase by the fraud 799 of the defendants.
In other words, the mode of dealing with damages in such a case is to see what it would have cost him to get out of the situation, i.e., how much worse off was his estate owing to the bargain in which he entered into.
The law on this subject has been very appositely stated in McConnel vs Wright(1) by Lord Collins in these terms: "As to the principle upon which damages are assessed in this case, there is no doubt about it now.
It has been laid down by several judges, and particularly by Cotton L. J. in Peek vs Derry(2), but the common sense and principle of the thing is this.
It is not an action for breach of contract, and, therefore, no damages in respect of prospective gains which the person contracting was entitled by his contract to expect to come in, but it is an action of tort it is an action for a wrong done whereby the plaintiff was tricked out of certain money in his pocket ; and therefore, prima facie the highest limit of his damages is the whole extent of his loss, and that loss is measured by the money which was in his pocket and is now in the pocket of the company.
That is the ultimate, final, highest standard of his loss.
But, in so far as he has got an equivalent for that money, that loss is diminished; and I think, in assessing the damages, prima facie the assets as represented are taken to be an equivalent and no more for the money which was paid.
So far as the assets are an equivalent, he is not damaged; so far as they fall short of being an equivalent, in that proportion he is damaged.
" The sole point for determination therefore in the case is whether the shares handed over to the plaintiff were an equivalent for the money paid or whether they fell short of being the equivalent and if so, to what extent.
Ordinarily the market rate of the shares on the date when the fraud wag practised would represent their real price in the absence of any other circumstance.
If, however, the market was vitiated or was in a state of flux or panic in consequence of the very fact that was fraudulently concealed, (1) (2) 800 then the real value of the shares has to be determined on a consideration of a variety of circumstances disclosed by the evidence led by the parties.
Thus though ordinarily the market rate on the earliest date when the real facts became known may be taken as the real value of the shares, never theless, if there is no market or there is no satisfactory evidence of a market rate for some time which may safely be taken as the real value, then if the representee sold the shares, although not bound to do so, and if the resale has taken place within a reasonable time and on reasonable terms and has not been unnecessarily delayed, then the price fetched at the resale may well be taken into consideration in determining retrospectively the true market value of the shares on the crucial date.
If there is no market at all or if the market rate cannot, for reasons referred to above, be taken as the real or fair value of the thing and the representee has not sold the things, then in ascertaining the real or fair value of the thing on the date when deceit was practised subsequent events may be taken into account, provided such subsequent events are not attributable to extraneous circumstances which supervened on account of the retaining of the thing.
These, we apprehend, are the well settled rules for ascertaining the loss and damage suffered by a party, in such circumstances.
If damages had been measured on the rules above stated by the courts below, this court would have then respected the concurrent finding on this point as the question of assessment of damages primarily is a question of fact and the concurrent findings of the courts below on such points except in very exceptional circumstances are not reviewed by this court.
We however find that in spite of the circumstance that the courts below correctly enunciated the rule of measuring damages in such cases, they estimated them on the difference between the cost price and the price realized at the sale on the 20th and 22nd at four different rates.
These four rates could obviously not represent the true value of the shares on the 5th.
801 Moreover the finding that the true value of these shares was lower than what was actually realized on their resale on the 20th and 22nd is not based on any evidence whatsoever.
Such a finding could only be arrived at on the basis of evidence on the record and by reference to that evidence, and this has not been done.
The High Court did not make an attempt to find out to what extent the value of the 'Shares fell short of being an equivalent for the money taken from the plaintiff.
Without determining this crucial issue we think it was not right to estimate the damage on the vague finding that the true value of the shares was lower than the value which they fetched at the resale on the 20th and 22nd.
In this situation, we have no alternative but to arrive at our own finding on this question in spite of the concurrent finding and we have to find as to what could be said to have been the true value of these shares on the relevant date.
In other words, the question for our determination is what the market value would have been on 5th April of these shares if all buyers and sellers had information that the market was to be closed on 8th and 9th April to enable settlement of outstanding transactions to be effected, and had appreciated the effect of that decision.
In the words of Buckley J. in Broome vs Speak(1), it is indeed a difficult question to answer beat that difficulty is no ground for refusing to answer it as has been done by the court below.
in order to determine the real price of these 3,000 shares sold to plaintiff by concealment of certain facts, the first question that needs decision is whether the market for these shares, the rate prevailing wherein would prima facie be a true index of their value, had been affected by the very fact concealed of which the plaintiff complains.
In this case from the proved facts it is clear that the market rate of these shares was seriously affected by reason of the impending decision of the Stock Exchange for closing it to stop the wave of speculation that had taken the frenzy of the market by reason of the merger of the two steel (1) [1931] I. Ch.
802 companies doing business in northern India.
The market reports for the week ending March 19, show that the Indian Irons were standing at or around Rs. 55.
By Satur day the 3rd April after the announcement of the terms of the merger by reason of the keen speculation the shares were being dealt at around Rs. 73.
On Monday the 6th April the price was Rs. 77.
On Tuesday the 6th, the day when the decision was taken to close the market for two days, these shares touched Rs. 79 but by the close of business fell back to Rs. 72 a sudden drop of Rs. 7.
On Wednesday the 7th April in the Calcutta market they closed at Rs. 58, a drop of Rs. 14 in a day.
These sudden rises and falls in the market during the course of these two days are sufficient indication of the fact that the drop was due to the decision of the Stock Exchange to close the Exchange for two days.
There is no evidence that any other factor was then disturbing the market rate of these shares.
The share market report of the defendants themselves issued on 10th April, 1937, amply bears out this fact.
In this report it was stated as follows : " The outstanding feature of the Indian markets during the week under review was the sudden landslide in Indian Iron and Steel shares, which proved infectious to the other sections of the market.
The week opened with a cheerful bullish sentiment and Indian Iron and Steels touched Rs. 80.
At this dizzy height, the markets lost their equilibrium and frenzied selling resulted in a sensational decline of about 25 points.
The heavy liquidation was due to a predominance of weak holders that had come into the market at a late stage.
Further, selling was accentuated by the decision of Calcutta Stock Exchange to close the Calcutta market on the 8th and 9th April to enable brokers to make deliveries and effect settlements for transactions in Indian Iron and Steel shares.
Heavy volume of business has been outstanding between brokers on account of the delay in getting certificates.
Prospect of immediate delivery of share certificates scared off weak holders and prices declined on heavy liquidation.
" 803 It is clear therefore that the decision of the calcutta Stock Exchange to close the Calcutta market on 8th and 9th affected the market prices considerably.
The Calcutta market on the 7th dropped from 72 to 58 as already stated.
The decision of the Calcutta Stock Exchange was published in the Hindu of Madras on the evening of the 7th.
From the statement of account, Exhibit P 41, filed by Trojan & Co. on 7th, about half a dozen transactions in these shares took place through them.
Most of the transactions, it appears, were by small holders of 100 scrips or so, who unloaded their shares between 71 to 60 per share.
On the 8th three transactions took place at Rs. 62.
No transaction took place between 8th and 14th.
There were two transactions on the 14th at Rs. 56, and there was a transaction on the 16th at Rs. 57 8 0.
On the 20th Trojan and Co. sold 2,000 of the plaintiff 's shares at rates varying between Rs. 44 12 0 and Rs. 47 4 0.
According to the statement of account of another broker, Ramlal & Co., there were about 16 transactions in these shares on the 7th.
Most of them were sold in lots of 100 or 200 and the sale price of these shares ranged from Rs. 74 to 64.
On the 8th there were a few transactions, the rates varying between Rs. 57 to Rs 66.
There was a transaction on the 9th at Rs. 60.
There were two or three transactions on the 10th also near about this rate.
No transaction after the 10th made by this company has been exhibited on the record.
Exhibit P 23 is another weekly share market report of Trojan & Co. issued on 17th April, 1937.
It states as follows : "In the first place, Indian Irons are very cheap around Rs. 46.
The company is doing extremely well and the stage is set for a steady rise to Rs. 70. . .
Indian Iron and Steels fluctuated between Rs. 55 to Rs. 60 and closed at Rs. 47.
The recent hectic speculation has brought its own nemesis.
" This report proves that there was really no market as it appears from the evidence on the record in 104 804 Madras between the 8th and 17th which was a Saturday, and on the 17th the prices seemed to be settling down at Rs. 46.
On the 19th the plainti gave to the, defendants an order to sell his 3,000 shares and it was said "Please retain this order till executed".
The defendants were only able to dispose of 2,000 of these shares on the 20th at prices varying between Rs. 44 12 0 to Rs. 47 4 0.
The remaining 1,000 shares the plaintiff was able to sell through Ramlal and Co. at Rs. 42 8 0 on 22nd April, 1937.
It is quite possible and probable that had the plaintiff placed an order before the 19th, say on the 16th or 17th, with the defendants or with Ramlal & Co., he might have been able to sell these 1,000 shares also at about the same price as he was able to dispose of his 2,000 shares.
No member of the defendants firm gave evidence in the case.
Plaintiff went into the witness box and stated that had he known what the defendants knew, he would not have purchased the shares.
The information was withheld from him that these shares were likely to godown.
He said that he was told by the defendants to sell the shares but no purchasers were available and in spite of his keenness to liquidate them he was not able to do so before the 20th and 22nd, that he approached Trojan & Co., the defendants firm for selling them, but they were not able to sell more than 2,000 shares. ' Considering the whole of this material, we are satisfied that the market rate prevailing on the 5th, 6th and 7th had been affected by reason of the decision of the Calcutta Stock Exchange to keep the market closed on the 8th and 9th and the market did not settle down till about the 17th or 18th and the prices then ruling can in the circumstances of this case be said to be their true market price.
In our judgment, Rs. 46 per share was the real price of these shares when they were put in the plaintiff 's pocket and he got Rs. 46 for each share in lieu of what he paid for either at Rs. 77 or at Rs. 77 4 0.
He is entitled to commission also which he would have to pay on the sale of these shares.
The difference between these 805 two rates is the damage that he has suffered and he is entitled to it.
For the reasons given above we modify the order passed by Clark J., and by the appellate Bench of the High Court to the extent indicated above and we estimate the plaintiff 's damage at Rs. 93,000 on account of the 3,000 shares at the rate of Rs. 31 per share.
The second question canvassed before the High Court and also before us was in respect of the Associated Cement shares.
As above stated, the plaintiff 's account was credited in the sum of Rs. 6,762 8 0 on account of the purchase of these shares.
Plaintiff had pleaded that the transaction was not authorised by him and that it had been made in contravention of his instructions.
He had claimed compensation on the ground of breach of instructions he did not in the alternative claim on the ground of failure of consideration the amount credited by the defendants in the promissory note account and which credit disappeared by reason of the failure of the suit on the promissory note.
At the hearing of the case before Bell J. the contention that the purchase was unauthorized was abandoned by counsel and the same position was adopted before Clark J. During cross examination of the plaintiff it was elicited that he either instructed the defendants to purchase the shares or at any rate ratified the purchase which the defendants had made on his behalf.
It was argued before the appellate Bench of the High Court that having pleaded one thing and having led evidence in support of that thing but later on having been forced to admit in the witness box that the true state of things was different the plaintiff had disentitled himself to relief as regards these shares and he could not be granted the relief that he had not asked for.
The High Court negatived this contention on the ground that though a claim for damages in respect of a particular transaction may fail, that circumstance was no bar to the making of a direction that the defendants should pay the plaintiff the money actually due in respect of that particular transaction.
It also held 806 that the plaintiff 's claim in respect of this item of Rs.6,762 8 O was with in limitation.
We are unable to uphold.
the view taken by the High Court on this point.
It is well settled that the decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be found.
Without an amendment of the plaint the court was not entitled to grant the relief not asked for and no prayer was ever made to amend the plaint so as to incorporate in it an alternative case.
The allegations on which the plaintiff claimed relief in respect of these shares are clear and emphatic.
There was no suggestion made in the plaint or even when its amendment was sought at one stage that the plaintiff in the alternative was entitled to this amount on the ground of failure of consideration.
That being so, we see no valid grounds for entertaining the plaintiff 's claim as based on failure of consideration on the case pleaded by him.
In disagreement with the courts below we hold that the plaintiff was wrongly granted a decree for the sum of Rs. 6,762 8 0 in respect of the Associated Cement shares in this suit.
Accounts settled could only be reopened on proper allegations.
The next point canvassed in the courts below was in respect of the claim of the plaintiff regarding interest on the amount found due to the plaintiff from 5th April, 1937, to the date of the suit.
It was contended that no interest could be allowed on damages because to do so would amount to awarding damages on damages which is opposed to precedent and principle.
Clark J., however, awarded interest by placing reliance on certain English decisions which enunciate the rule that an agent who receives or deals with the money of his principal improperly and in breach of his duty or who refused to pay it over on demand is liable to pay interest from the time when he so receives or deals with the same or from the time of the demand.
We think it is well settled that interest is allowed by a court of eqity in the case of money obtained or retained by fraud.
As 807 stated in article 423 of Volume 1 of Halsbury, the agent must also pay interest in all cases of fraud and on all bribes and secret profits received by him during his agency.
Their Lordships of the Privy Council in johnson vs Rex(1) observed as follows: "In order to guard against any possible misapprehension of their Lordships ' views they desire to say that in their opinion there can be no doubt whatever ' that money obtained by fraud and retained by fraud can be recovered with interest, whether the proceedings be taken in a court of equity, or a court of law, or in a court, which has jurisdiction both equitable and legal.
" The appeal court affirmed the view of Clark J. on this point.
The learned counsel for the appellant contended that the decisions relied upon concerned cases where the agent had retained some money of his principal in his hands but that in the present case the claim was merely for damages.
This contention is fallacious.
By reason of the transaction brought about by fraudulent concealment plaintiff paid to the defendants a sum of Rs. 60,000 in cash which he would not have parted with otherwise and he also lost the money which stood at his credit with the defendants.
It is thus clear that the agents had a large sum of the plaintiff with them which they would not have acquired but by reason of the fraud that they practised on him.
In this view of the case we see no force in the contention of the learned counsel and we repel it.
The only other point that was argued before us was in respect of future interest.
It was not denied that plaintiff was entitled to future interest as allowed to him at the rate of 6% on the amount found due.
it was however argued that the plaintiff should not have been allowed interest for the period of one year and six months during which the decree stood satisfied.
The facts are that on 9th March, 1943, a decree for Rs. 51,805 1 0 carrying interest at six per cent.
was (1) 808 passed in favour of the plaintiff.
On the 11th May, 1943, an amount of Rs. 71,000 due under this decree was paid by the defendants to the Official Assignee.
This amount was returned by the Official Assignee to the defendants on 12th September, 1944, after that decree had been set aside.
Meanwhile the plaintiff 's adjudication had been annulled and he had been brought on the record on 16th March, 1944.
It was contended that during the period when the money remained with the Official Assignee who was the plaintiff no future interest was payable as the decree stood satisfied during that period.
The High Court rejected this contention on the ground that when this money was paid into court, it was coupled with a prayer that it should not be paid out to the creditors of the insolvent 's estate pending disposal of the appeal, and therefore as the money was not distributable amongst the insolvent 's creditors, interest for this period had been rightly allowed.
In our opinion, this view cannot be sustained.
So far as the defendants judgment debtors are concerned they had done their part and paid the money to the decree holder and had thus satisfied the decree.
It was open to the Official Assignee, the decree holder, not to take the money on the condition on which it was given to him and if he had not taken the money from the defendants he could then justly have claimed future interest on this amount, but having taken the money and kept it, it could not be said that during this period anything was due to the plaintiff from the defendants.
The defendants certainly had paid the decretal amount and whether the plaintiff or his predecessor in interest was able to use it or not was a circumstance wholly immaterial in considering whether future interest should or should not be allowed.
In our judgment, the plaintiff was not entitled to future interest at the rate allowed for one year and six months period, beginning from 9th March, 1943, and ending with 12th September, 1944.
The appeal is therefore allowed to the extent indicated above.
The decree of the High Court will be 809 modified and plaintiff will be entitled to damages in the sum of Rs. 93,000 on the 3,000 Indian Iron shares.
The decree given to the plaintiff in respect of ' Rs. 6,762 8 0 is set aside over and above the ' decree for Rs. 9,100 in his favour set aside by the High Court.
In the calculation of future interest the plaintiff will not be allowed interest from 9th March, 1943, to 12th September, 1944.
In the result the decree given to the plaintiff in the sum of Rs. 61,787 is reduced to Rs. 42,175.
He will get interest at six per cent.
per annum from 5th April, 1937, until payment or realization except for a period of one year and six months.
Plaintiff will get proportionate costs throughout.
Appeal allowed in part.
| Where a person is induced to purchase shares at a certain price by fraud the measure of damages which he is entitled to recover from the seller is the difference between the price which he paid for the shares and the real price of the shares on the date on which the shares were purchased.
Ordinarily the market rate of the shares on the date when the fraud was practised would represent their real price in the absence of any other circumstance.
If, however, the market was vitiated or was in a state of flux or 790 panic in consequence of the very fact that was fraudulently concealed, then the real value of the shares has to be determined on a Consideration of a variety of circumstances, disclosed by the violence led by the parties.
A firm of sharebrokers sold 3,000 shares to the plaintiff who was a constituent of the firm, on the 5th April, 1937, at Rs. 77 and Rs. 77 4as, per share without disclosing to the plaintiff the fact that the shares were owned by one of the partners of the firm and also the fact that they had received telephonic information on that day from a member of the Stock Exchange that there was going to be a sharp decline in the price of the shares.
On the 6th April the Stock Exchange Association passed a resolution for closing the Exchange on the 8th and 9th April.
The plaintiff had to sell 2,000 shares through the defendants on the 20th April at Rs. 47 to Rs. 42 per share, and 1,000 shares on the 22nd April at Rs. 428as.
The High Court awarded the difference between the price paid by the plaintiff and the prices fetched on resale as damages.
On appeal, Held, that the prices received at the resale on the 20th and 22nd April could not represent the true value of the shares on the 5th April.
The real question for determination was what the market value would have been on the 5th April of these shares if all the buyers and sellers know that the Stock Exchange was to be closed on the 8th and 9th April.
Held also that the plaintiff was entitled to get interest on the amount awarded as damages from the 5th April till the date of suit on the principle that where money is obtained or retained by fraud a court of equity will order it to be returned with interest.
Johnson vs Rex ([1904] A.C. 817) referred to.
It is well settled that the decision of a case cannot be 'based on grounds outside the pleadings of the parties and that it is the case pleaded that has to be found.
Where the plaintiff based his claim for a certain sum of money on the ground that the defendants had sold certain shares belonging to him without his instructions, but he was not able to prove that the sale was not authorised by him: Held, reversing the decision of the High Court, that the plaintiff could not be given a decree for the sum claimed on the ground of failure of consideration, as he had not set up any such alternative claim in the plaint or even at a later stage when he sought to amend the plaint.
|
the Court to interpret words of ambiguous meaning in a, broad and liberal sense, 107 826 & CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 61 of 1952.
Appeal by special leave granted by the Supreme Court on the 10th September, 1951, from the Judgment and Order dated the 5th March, 1951, of the High Court of Judicature at Bombay (Chagla C.J. and Bhagwati J.) in Criminal Appeal No. 394 of 1950 arising out of the Judgment and Order dated the 29th May, 1950, of the Court of the Presidency Magistrate, Second Court, Mazagaon, Bombay, in Cases Nos.
630 /P and 635/P of 1949.
M.P. Amin (R. J. Kolah, with him) for appellants Nos. 1, 2 and 4.
As K. Muthuswami for appellant No. 3. C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for the respondent. 1953.
March 30.
The Judgment of the Court was delivered by BOSE, J.
The appellants have been convicted under sections 7 and 9 of the Essential Supplies Act (No. XXIV of 1946) on two counts.
The first appellant is a registered joint stock company, the Seksaria Mills Ltd. It was fined Rs. 10,000 on each of the two counts, that is to say, a total fine of Rs. 20,000, and this was upheld in appeal.
The second appellant is the Director of the Mills.
He was sentenced to two months ' rigorous imprisonment and to a fine of Rs. 2,00,000 on each count.
In appeal the sentence of imprisonment was set aside and the fine reduced to Rs. 10,000 on each count.
The third appellant is the General Manager of the Mills.
He was sentenced to a fine of Rs. 2,000 on each count.
This has been upheld.
The fourth appellant is the Sales Manager of the Mills.
He was sentenced to four months ' rigorous imprisonment and a fine of Rs. 1,00,000 on.
each count.
In appeal the sentence of imprisonment was upheld but the fine was reduced to Rs. 10,000 on each count.
The substantive sentences are to run concurrently.
827 A Government of India Notification dated 2nd February, 1946, required every manufacturer to submit " true and accurate information relating to his undertakings " to the Textile Commissioner C.S.T. Section at Bombay.
In compliance with this Order the first appellant submitted a return, signed by the third appellant, on 10th March, 1947.
This return is Exhibit A 1.
It showed that 13 bales of cloth (20 half bales and 3 full bales) were delivered to Messrs. Dwarkadas Khetan & Company of Bombay during the month of February, 1947, on behalf of the quotaholder Shree Kishan & Company.
Another return of the same date (Exhibit A 2), also relating to the month of February, 1947, showed that 6 bales were delivered to the same Dwarkadas Khetan & Company on behalf of another quota holder Beharilal Bajirathi.
A note on the back of each printed form states.
By 'delivered 'or delivery ' is meant physical delivery of cloth in bales or in pieces but not cloth which though paid for is still in the I physical possession of the seller.
" The offence charged is that this information is not true and accurate.
The case for the prosecution is that the bales remained in the physical possession of the first appellant at all material times and were not physically delivered to Messrs. Dwarkadas Khetan & Company.
Before us the learned Solicitor General added that even if there was physical delivery to Dwarkadas Khetan that did not comply with the requirements of the form because the form requires information regarding physical delivery to the quota holder or his agent and as Dwarkadas Khetan was not the agent of the quota holder, the statement is inaccurate and misleading.
The learned Presidency Magistrate who tried the case, and also the High Court on appeal, hold that the prosecution have established their case and so have convicted and upheld the convictions respectively.
828 The business procedure of the first appellant is explained by Dwarkadas Khetan.
His firm, Dwarkadas Khetan & Company, are the first appellant 's sole selling agents. ' They are del credere agents and guarantee payment to the first appellant of all sales made and, on the other side, guarantee delivery to the purchasers with whom they deal direct.
It is necessary at this stage to understand that because of various orders and rules made under the Essential Supplies Act the first appellant could only sell to specified quota holders and only up to the limits of their quotas.
The two quota holders which concern us are Shree Kishan & Company and Beharilal Bairathi.
The first appellant 's selling procedure is this.
When goods are ready for sale, it sends Dwarkadas Khetan & Company in duplicate a " ready sale note ".
These notes contain particulars about the bales and the persons to whom they are to be delivered.
Upon receipt of this Dwarkadas & Company contact the quota holders or their agents.
The next step is for the quota holder to pay Dwarkadas & Company the price of the goods specified in the " ready sale note".
Upon receipt of the money, one of the two notes is handed over to the quota holder or his agent and he is given a receipt for the money paid.
At the same time Dwarkadas & Company send the first appellant an " advice slip " telling it that the money has been received and asking it to prepare a delivery order.
The first appellant then debits Dwarkadas & Company with the price and not the purchaser.
For payment it looks to Dwarkadas & Company.
Upon receipt of this advice slip the first appellant 's office prepares the delivery order and delivers the goods to the party concerned.
The person receiving the goods then signs the delivery order in token of receipt and the signed order is sent to Dwarkadas & Company who, after making the necessary entries in their books, return the order to the Mills office.
It will be seen that the first appellant has no direct dealing, with the purchaser.
It acts through Dwarkadas & Company in every case.
829 It will now be necessary to trace the history of the two consignments relating to the 13 bales and the 6 bales separately.
We will deal with the 13 bales first.
The quota holder in respect of the 13 bales was Shree Kishan & Company.
This firm was an up country firm and so it was necessary for it to appoint a local agent in Bombay for making payments and receiving delivery.
There was some confusion about the agent so appointed; at first one Dharsi Moolji was appointed and then P. C. Vora.
The letter informing the first appellant that Dharsi Moolji bad been appointed is not on record but we were told at the Bar that it is not disputed that I the letter is dated 7th February, 1947.
In any case, Dharsi Moolji wrote to the first appellant on 20th February, 1947, saying that he had been authorised to take delivery of the January quota on behalf of Messrs. Shree Kishan & Company and on 21 st February, 1947, he paid Dwarkadas Khetan & Company a sum of Rs. 14,000 for this quota.
A receipt and an entry in Dwarkadas ' books evidence the payment.
The same day Dwarkadas Khetan wrote to the first appellant telling it that his firm had received payment in advance from Shree Kishan & Company and that the 13 bales should be sent to "our godown ", Whether the " our " refers to Dwarkadas ' godown or to a godown jointly shared between Dwarkadas and the first appellant is not clear.
The learned High Court Judges hold that the godown belonged to the first appellant, but that, in our opinion, is not very material for reasons we shall give later.
On receipt of this " advice slip " the first appellant prepared what it has called a " ready sale note " on the same.
day, 21st February, 1947, authorising the purchaser to take delivery within a week.
Dharsi Moolji was named as the Commission Agent.
(The man now entered is Prataprai Chunilal, that is, P. C. Vora, but the original name was Dharsi Moolji.
The change was made for reasons which will presently appear).
830 In pursuance of all this, the first appellant dispatched the 13 bales on 28th February, 1947, and sent them to Dharsi Moolji.
But in the meanwhile other events had taken place.
One P. C. Vora wrote to the first appellant on 17th February, 1947, and said that he had been authorised to take possession of these 13 bales.
What had happened in the meanwhile was that the, quota holder Shree Kishan & Company had changed its local agent.
Accordingly, when the goods reached Dharsi Moolji he refused to take delivery.
The selling agent Dwarkadas thereupon telephoned the first appellant.
He explained that he had actually, received the money for the bales from Dharsi Moolji and had not received anything from P. C. Vora and so could not deliver the goods to the latter and equally could not accept money from P. C. Vora until the matter had been straightened out with Dharsi Moolji.
The first appellant thereupon told Dwarkadas to keep the goods in the Dady Seth godown.
On the same day, apparently before all this occurred, the first appellant credited Dwarkadas Khetan with the money he had received from Dharsi Moolji on account of the 13 bales, less Dwarkadas ' commission.
In other words, this adjustment in the accounts was the equivalent of payment for the 13 bales by Dwarkadas Khetan to the first appellant on account of the purchaser Shree Kisban & Company.
It will be remembered that Dwarkadas Khetan & Company were the sole selling agents and they alone were responsible to the Mills for orders ' which. were placed through them.
The muddle between Dharsi Moolji and P. C. Vora was cleared up between 3rd March, 1947, and 14th March, 1947.
On 3rd March, 1947, Dwarkadas Khetan returned the Rs. 14,000 which Dharsi Moolji had paid and on 14th March, 1947, accepted the money from P. C. Vora.
The alteration in the "ready sale note" of 21st February, 1947, was presumably made because of these facts.
Four days later, Dwarkadas Khetan delivered the goods to P. C. Vora.
(There was no need to make any alterations in the first 831 appellant 's account books because Dwarkadas was responsible for the price whatever happened between him and Dharsi and also because in any event the.
goods were sold to Shree Kishan: the only query at that time was who was his agent to accept delivery for him).
The return with which we are concerned was made on 10th March, 1947.
It will be seen from the above that the position at that date was as follows: (1) the selling, agent bad informed the first appellant that he had effected a sale, (2) the selling agent had paid the first appellant for the goods, (3) specific bales had been set aside and appropriated to the sale and consequently the property in the goods had passed, (4) the goods had actually left the Mills ' premises, and (5) they were in the Dady Seth godown under the control of Dwarkadas Khetan.
We say the goods were under the control of Dwarkadas Khetan for three reasons: (1) as shown above, the property in the goods had passed and so the, first appellant no longer had title to them, (2) Dwarkadas says that until be received the money for them from P. C. Vora he would have refused to deliver them, (3).
being a del credere agent he would have been within his rights (a) to refuse delivery to anybody till he was paid and (b) to deliver them despite anything the first appellant might say once he received his money; also because Dwarkadas ' Mehtaji says "If the goods are not, accepted by the merchants or their agents, the same are sent to us and we keep them in the godown.
" Bearing these facts in mind, we will now examine the offending document.
It is a printed form.
The heading is " Manufacturer 's Returns showing detail% of delivery to quota holders or other8 of civil cloth.
" Then there is a note as follows : " IMPORTANT: This form should be completed in accordance with the instructions printed overleaf. giving full details relating to the previous month, 832 Under that is the following "All stocks pledged/hypothecated by manufacturers with banks or others shall be included in this statement.
" The only column in the printed form which could be related to this is column 3 headed " Full name and address of person to whom delivered.
" On the back there are the following instructions: "II.
The word I others ' in the heading of the form includes artificers who are privileged to purchase cloth under General Permission No. TCS 42 / 1, dated 10th August, 1944, and any person to whom deliveries are made under any other General or Special Permission or Order of the Textile Commissioner.
The name of artificers or any other persons shall be 'mentioned in column 3 and against their names, number and date of General or Special Permission shall be mentioned in column 2.
By 'delivered ' or 'delivery 'ismeantphysical delivery of cloth in bales or in pieces but not cloth which, though paid for, is still in the physical possession of the seller.
" The form was filled in as follows : In the column headed 11 Full name and address of quota holder " the name of ShreeKishan & Company is entered.
In the column headed Full name and address of person to whom delivered the name of Dwarkadas Khetan & Company is entered.
The question we,have to decide is whether these two entries are inaccurate.
Dealing first with the learned Solicitor 'General 's argument regarding the construction of the words used in the form, we are of opinion that it cannot be accepted.
The second clause of the portion marked "Important" towards the head of the form states that all stocks pledged or hypothecated with banks or others must also be included, and Instruction No. II on the back directs that the names of "any other person" must be entered in column 3 and that the number and date of the General or Special Permission must be set out in column 2, Whether this means that goods 833 cannot be pledged without permission or that only goods allotted to quota holders can be pledged we do not know, but whatever it means, it is clear that the entry in column 3 is not intended to be confined to quota holders or their agents but means what it says, namely the person to whom physical delivery of the goods has been made whoever he may be.
The only question therefore is whether there was physical delivery to Dwarkadas Khetan.
In one sense, there can be no doubt about that.
The goods left the Mills ' premises, the property in them had passed and when Dharsi Moolji refused to receive them they were handed over to Dwarkadas Khetan and not taken back to the Mills.
Dwarkadas Khetan asked the Mills what he should do with them, and in the end he placed them in the Dady Seth godown.
In any ordinary understanding of the term it would be clear that the goods had been physically delivered to Dwarkadas Khetan.
But the learned High Court Judges do not appear to have concerned themselves with the question of actual physical possession because they say: "It would not be true to say, and the record amply bears it out, that this godown belonged to Dwarkadas Khetan.
Even if Dwarkadas Khetan had control over the godown, the control was exercised on behalf of and as the agent of the Mills.
" Therefore, the test of the sort of possession which they had in mind was not the control over the goods.
But that has always been regarded as one of the tests of physical or de facto possession.
Lancelot Hall distinguishing between possession in law and possession in fact says that "possession in the popular sense denotes a state of fact of exclusive physical control".
See his treatise on Possessory Liens in English Law, page 2.
See also Pollock and Wright in their Essay on Possession in the Common Law, page 119.
Drawing the same distinction they say that "physical possession" may be generally described by stating that 108 834 "when a person is in such a relation to a thing that, so far as regards the thing, he can assume, exercise or resume manual control of it at pleasure, and so far as regards other persons, the thing is under the protection of his personal presence, or in or on a house or land occupied by him, or in some receptacle belonging to him and under his control.
" This would seem exactly to meet the case of Dwarkadas Khetan.
Possession is an ambiguous term.
The law books divide its concept into two broad categories, (1) physical possession or possession in fact and (2) legal possession which need not coincide with possession in fact.
The offending form with which we are concerned draws the same broad line.
But even on the factual side of the border niceties creep in and so the possession of a servant is called custody rather than possession.
But what of an agent ? If a man lives abroad over a period of years and leaves his house and furniture in charge of an agent who has the keys of the house and immedi ate access to and physical control over the furniture, it would be difficult to say that the agent was not in physical possession.
It is true the legal possession would continue to reside in the owner but the actual physical possession would surely be that of the agent.
And so with a del credere agent, because such a person is the agent of the seller only up to a point.
Beyond that he is either a principal or an agent of the buyer.
This distinction was discussed by one of us in the Nagpur High Court in Kalyanji Kuwarji vs Tirkaram Sheolal(1) and was accepted by the Madras High Court in Kandula Radhakrishna Rao vs The Province of Madras(2).
But we need not go into all this.
Here is an Order which is to affect the business of hundreds of persons, many of whom are small petty merchants and traders, the sort of meni who would not have lawyers constantly at their elbow; and even if they did, the more learned their advisers were in the law the more puzzled (1) A.I.R. 1938 Nag.
(2) 835 they would be as to what advice to give,for it is not till one is learned in the law that subtleties of thought and bewilderment arise at the meaning of plain English words which any ordinary man of average intelligence, not versed in the law, would have no difficulty in understanding.
In a penal statute of this kind it is our duty to interpret words of ambiguous meaning in a broad and liberal sense so that they will not become traps for honest, unlearned (in the law) and unwary men.
If there is honest and substantial compliance with an array of puzzling directions, that should be enough even if on some hypercritical view of the law other ingenious meanings can be devised.
In our opinion, Dwarkadas Khetan could, in the circumstances given above, be described, without any straining of language, as the person to whom the goods were actually delivered.
It follows the conviction on this count cannot stand.
We would like to add that in any event, even if ultra technical notions regarding the concept of possession were to be incorporated into the case, it would be wrong to say that there had been anything beyond a technical and unintentional breach of the law.
The facts are truly and accurately given according to the popular and natural meaning of the words used; nothing was hidden.
The goods did reach the quotaholder in the end, or rather his proper agent, and we cannot see what anyone could stand to gain in an unauthorised way over the very natural mistake which occurred owing to what seems to have been a time lag in the consequences of a change of agency.
So, even if there was a technical breach of the law, it was not one which called for the severe strictures which are to be found in the trial court 's judgment and certainly not for the savage sentences which the learned Magistrate imposed.
In the High Court also we feel a nominal fine would have met the ends of justice even on the view the learned Judges took of the law.
The charge on the second count relating to the 6 bales is a similar one and the facts follow the same pattern.
They have been detailed in the High Court 's 836 judgment, so it is not necessary to do more than outline them here.
The quota holder here is Beharilal Bairathi.
In this case also, Dharsi Moolji paid Dwarkadas Khetan for the goods and the Mills sent the bales to Dharsi Moolji for delivery in the same truck as the 13 bales.
Dharsi Moolji refused to accept these bales also, so they were deposited in the Dady Seth godown along with the other thirteen.
Dwarkadas Khetan & Company has been entered as the person to whom delivery was made.
For the reasons given above, we hold that this was a true and accurate return.
The appeal is allowed.
The conviction and sentence in each of the four cases is set aside.
The fines, if paid, will be refunded.
Appeal allowed.
Agent for appellants Nos. 1, 2 & 4: Rajinder Narain.
Agent for appellant No. 3: Ganpat Rai.
| A Government Notification issued under the Essential Sup plies Act, 1946, required every manufacturer to submit "true and accurate information relating to his undertakings" and a note of the printed form stated that "by 'delivered ' or 'delivery ' is mean physical delivery of cloth in bales and pieces but not cloth which though paid for, is still in the physical possession of the seller.
The appellant Mills were manufacturers of cloth and D.K. & Co. were their sole del credere, selling agents who guaranteed payment to the appellant of the price of all sales made and, on the other side, guaranteed delivery to the purchasers with whom they dealt direct.
One D.M. informed the Mills as the agent of an up country quota holder that he bad been authorised by the latter to take delivery of 13 bales and on this account paid Rs. 14,000 to D.K. & Co. D.K. & Co. wrote to the Mills that they bad received payment.
The Mills dispatched the goods to D.M. but meanwhile the quota.
holder had changed his agent and D.M. refused to take delivery.
The Mills credited the money which had been received from D.M. to D.K. godown till the question of delivery was settled.
In a return submitted under the Essential Supplies Act 1946, these 13 bales were shown &a "delivered" to D. K. & Co. The appellants were prosecuted and convicted on the ground that physical delivery was not given to D.K. & Co. and the return, was not therefore true and accurate: Held, that, as the goods had left the Mill premises, the price had been paid and the property in them had passed and as they were in a godown under the control of D. K. & Co., D. K. & Co. were in the circumstances, the persons to whom the goods were actually delivered, and the conviction was illegal.
A del credere agent is an agent of the seller only up to a point.
Beyond that he is either a principal or an agent of the buyer.
|
iminal Appeal No. 43 of 1952 and Petition No. 173 of 1952.
Appeal by Special Leave granted by the Supreme Court on the 11th May, 1951, from the Judgment and Order dated the 11th December, 1950, of the High Court of Judicature at Hyderabad (Manohar Prasad J.) in Criminal Appeal No. 598 of 1950, and Petition under Article 32 of the Constitution.
A. A. Peerbhoy (J. B. Dadachanji, with him) for the appellant.
V. Rajaram Iyer, Advocate General of Hyderabad (R. Ganapathy Iyer, with him) for the respondent.
March 30.
The Judgment Of PATANJALI SASTRI C.J., MUKHERJEA, section R. DAS, and BHAGWATI JJ.
was delivered by MUKHERJEA J. GHULAM HASAN J delivered a separate but concurring judgment.
MUKHERJEA J.
The appellant before us, who in the year 1947 was a Revenue Officer in the District of Warangal within the State of Hyderabad, was brought to trial before the Special Judge of Warangal appointed, under Regulation X of 1359F. on charges of murder, attempt to murder, arson, rioting and other offences punishable under various sections of the Hyderabad Penal Code.
The offences were alleged to have been committed on or about the 9th of December, 1947, and the First Information Report 664 was lodged, a considerable time afterwards, on 31st January, 1949.
On 28th August, 1949, there was an order in terms of section 3 of the Special Tribunal Regulation No. V of 1358 F., which was in force at that time, directing the appellant to be tried by the Special Tribunal (A).
The accused being a public officer, the sanction of the Military Governor was necessary to prosecute him and this sanction was given on 20th September, 1949.
On 13th December, 1949, a new Regulation, being Regulation No. X of 1359F., was passed by the Hyderabad Government which ended the Special Tribunals created under the previous Regulation on and from 16th December, 1949 ; and consequently upon such termination pro vided for the appointment, power and procedure of Special Judges.
Section 4 of the Regulation authorised the Chief Minister to appoint, after consulting the High Court, as many Special Judges as may from time to time be required for the purpose of section 5.
Section 5(1) laid down that every Special Judge shall try (a) such offences of which the trial was immediately before the 16th December, 1949, pending before a Special Tribunal deemed to have been dissolved on that date, and are made over to him for trial by the Chief Minister or by a person authorised by the Chief Minister in this behalf; and (b) such offences as are after the commencement of this Regulation made over to him for trial by the Chief Minister or by a person authorised by the Chief Minister in this behalf.
On 6th January, 1950, the case against the appellant was made over to Dr. Lakshman Rao, a Special Judge of Warangal, who was appointed under the above Regulation under an order of the Civil Administrator, Warangal, to whom authority under section 5 of the Regulation was delegated by the Chief Minister and on the same date the Special Judge took cognizance of the offences.
The trial commenced on and from 11th February, 1950, and altogether 21 witnesses were examined for the prosecution and one for 665 the defence.
The Special, Judge, by his judgment dated the 8th of May, 1950, convicted the appellant of all the offences with which he was charged and sentenced him to death under section 243 of the Hyderabad Penal Code (corresponding to section 302 of the Indian Penal Code) and to various terms of imprisonment under sections 248, 368, 282 and 124 of the Code of Hyderabad (which correspond respectively to sections 307, 436,342 and 148 of the Indian Code).
Against this judgment the appellant took an appeal to the High Court of Hyderabad and the appeal was first heard by a Division Bench consisting of Shripat Rao and section Ali Khan JJ.
On 29th September, 1950, the learned Judges delivered differing judgments, Shripat Rao J. taking the view that the appeal should be dismissed, while the other learned Judge expressed the opinion that the appeal ought to be allowed and the accused acquitted.
The case was then referred to Mr. Justice Manohar Prasad, as a third Judge and by his judgment dated the 11th of December, 1960, the learned Judge agreed with the opinion of Shripat Rao J. and dismissed the appeal upholding the conviction and sentences passed by the Special Judge.
The appellant then presented an application for leave to appeal to this court.
That application was rejected by the High Court of Hyderabad, but special leave to appeal was granted by this court on 11th May, 1951, and it is on the strength of this special leave that the appeal has come before us.
The present hearing of the appeal is confined to certain constitutional points which have been raised by the appellant attacking the legality of the entire trial which resulted in his conviction on the ground that the procedure for trial laid down in Regulation X of 1359F. became void after the 26th of January, 1960, by reason of its being in conflict with the equal protection clause embodied in article 14 of the Constitution.
These grounds have been set forth in a separate petition filed by the appellant under article 32 of the Constitution and following the procedure adopted in the case of Qasim Razvi [Case No. 276 666 of 1951(1)],we decided to hear arguments on the con stitutional questions as,preliminary points in the appeal itself.
Whether the appeal would have to be heard further or not would depend on the decision which we arrive at in the present hearing.
The substantial contention put forward by Mr. Peerbhoy, who appeared in support of the appeal, is that as the procedure for trial prescribed by Regulation X of 1359F. deviated to a considerable extent from the normal procedure laid down by the general law and deprived the accused of substantial benefits to which otherwise he would have been entitled, the Regulation became void under article 13(1) of the Constitution on and from the 26th of January, 1950 The conviction and the sentences resulting from the procedure thus adopted must, therefore, be held illegal and inoperative and the judgment of the Special Judge as well as of the High Court should be quashed.
The other point raised by the learned counsel is that the making over of the case of the appellant to the Special Judge was illegal as the authority to make over such cases was not properly delegated by the Chief Minister to the Civil Administrator in the manner contemplated by section 5 of the Regulation.
As regards the first point, it is to be noted at the out set that the impugned Regulation was a pre Constitution statute.
In determining the validity or otherwise of such legislation on the ground of any of its provisions being repugnant to the equal protection clause, two principles would have to be borne in mind, which were enunciated by the majority of this court in the case of Qasim Razvi vs The State of Hyderabad (1), decided on the 19th of January, 1953, where the earlier decision in Lachman Das Kewalram vs The State of Bombay(1) was discussed and explained.
Firstly, the Constitution has no retrospective effect and even if the law is in any sense discriminatory, it must be held to be valid for all past transactions and for enforce ment of rights and liabilities accrued before the (1) (2) ; 667 coming into force of the Constitution.
Secondly, article 13(1) of the Constitution does not necessarily make the whole statute invalid even after the advent of the Constitution.
It invalidates only those provisions which are inconsistent with the fundamental rights guaranteed under Part III of the Constitution.
The statute becomes void only to the extent of such inconsistency but otherwise remains valid and operative.
As was said in Qasim Razvi 's case(1) the fact that " trial was continued even after 26th January, 1950, under the same Regulation would not neces sarily render the subsequent proceedings invalid.
All that the accused could claim is that what remained of the trial must not deviate from the normal standard in material respects, so as to amount to a denial of the equal protection of laws within the meaning of article 14 of the Constitution.
For the purpose of determining whether the accused was deprived of such protection, we have to see first of all whether after eliminating the discriminatory provisions in the Regulation, it was still possible to secure to the accused substantially the benefits of a trial under the ordinary law; and if so, whether that was actually done in the particular case.
" As has been stated already, the Special Judge took cognizance of this case on the 5th of January, 1950, ' which was prior to the advent of the Constitution.
It must be held, therefore, that the Special Judge was lawfully seized of the case, and it is not possible to say that the appointment of a Special Judge was in itself an inequality.
in the eye of the law.
The trial undoubtedly commenced from the 11th of February, 1950, that is to say, subsequent to the coming into force of the Constitution, and the question that requires consideration is, whether the procedure that was actually followed by the Special Judge acting under the impugned Regulation did give the accused the substance of a normal trial, or, in other words, whether he had been given a fair measure of equality in the matter of procedure ? (1) 668 Mr. Peerbhoy lays stress on two sets of provisions in the impugned Regulation which, according to him, differentiate the procedure prescribed in it from that laid down under the ordinary law.
The first set relates to the elimination of the committal proceeding and the substitution of warrant procedure for the sessions procedure in the trial of offences.
The other set of provisions consists of those which deny to the accused the rights of revision and transfer and withdraw from him the safeguards relating to confirmation of sentences.
The first branch of the contention, in our opinion, is unsustainable having regard to our decision in Qasim Razvi 's case(1).
It was pointed out in that case that under the Hyderabad Criminal Procedure Code the committal proceeding,is not an indispensable preliminary to a sessions trial.
Under section 267A of the Hyderabad Criminal Procedure Code, the Magistrate is quite competent, either without recording any evidence or after recording only a portion of the evidence, to commit an accused for trial by the sessions court if, in his opinion, there are sufficient grounds for such committal.
If the committal proceeding is left out of account as not being compulsory, and its absence did not operate to take away the jurisdiction of the Special Judge to take cognizance of the case before the Constitution, the difference between a warrant procedure prescribed by the impugned Regulation to be followed by the Special Judge after such cognizance was taken and the sessions procedure at that stage applicable under the general law is not at all substantial, and the minor differences would not bring the case within the mischief of article 14 of the Constitution.
This question having been already decided in Qasim Razvi 's case(1) it is not open for further arguments in the present one.
With regard to the other set of provisions, the contention of Mr. Peerbhoy is based entirely upon the language of section 8 of the Regulation.
In our opinion, the interpretation which the learned counsel seeks to put upon the section is not quite correct, (1) 669 and it seems to us that not only the right of an accused to apply for transfer of his case has not been taken away by this section, but the right of revision also has been left unaffected except to a small extent.
Section 8 of the Regulation X of 1359 F. is in these terms: "All the provisions of section 7 of the said Regulation shall have effect in relation to sentences passed by a Special Judge as if every reference in the said Regulation to a Special Tribunal included a reference to a Special Judge.
" The expression "said Regulation" means and refers to Regulation V of 1358 F. and section 7 of the said Regulation provides inter alia that "there shall save as here in before provided, be no appeal from any order or sentence passed by a Special Tribunal, and no court shall have authority to revise such order or sentence or to transfer any case from Special Tribunal or have any jurisdiction of any kind in respect of any proceeding before a Special Tribunal and no sentence of a Special Tribunal shall be subject to or submitted for confirmation by any authority whatsoever.
" It will be noticed that what section 8 of the impugned Regula tion does, is to incorporate, not the whole of section 7 of the previous Regulation, but only such portion of it as relates to sentences passed by a Special Judge.
By "sentence" is meant obviously the final or definitive pronouncement of the criminal court which culminates or ends in a sentence as opposed to an "order", interlocutory or otherwise, where no question of infliction ' of any sentence is involved.
The scope of section 7 of the earlier Regulation is thus much wider than that of present section 8 and all the limitations of the earlier statute have not been repeated in the present one.
The result, therefore, is that revision against any order which has hot ended in a sentence is not interdicted by the present Regulation, nor has the right of applying for transfer, which has no reference to a sentence, been touched at all.
These rights are expressly preserved by section 10 of the present 87 670 Regulation, which makes the Code of Criminal 'Procedure applicable in all matters except where the Regulation has provided otherwise.
Reading section 8 of the present Regulation with section 7 of the earlier one, it may be held that what has been taken away from an accused is, in the first place, the right of revision against non appealable sentences, and in the second place, the provisions relating to confirmation of sentences.
The first one is immaterial for our present purpose, as no question of any non appealable sentence arises in the case before us.
The second is undoubtedly a discriminatory feature and naturally Mr. Peerbhoy has laid considerable stress upon it.
Section 20 of the Hyderabad Criminal Procedure Code lays down the rule relating to confirmation of sentences in the following manner: Every Sessions Judge may pass any sentence authorised by law, but such sentence shall not be carried into effect until (1) in the case of a sentence of 10 years 'impri sonment or more, the appropriate Bench of the High Court; (2) in the case of life imprisonment, the Government; and (3) in the case of death sentence, H.E.H. the Nizam, shall have assented thereto.
Section 302 provides that when a sessions court as passe a sentence of death 'or of life imprisonment or of imprisonment exceeding 10 years, the file of the case shall be forwarded to the High Court and the execution of the sentence stayed until manjuri is given in accordance with section 20.
Section 307 further provides that when the High Court has affirmed a death sentence or sentence of life imprisonment, then its opinion together with the file of the case shall be forwarded ' for ratification to the Government within one week and the sentence shall not be carried into effect until after the assent thereon of H.E.H. the Nizam in the case of death sentences and of the Government in the case of 671 sentences of life imprisonment.
Mr. Peerbhoy 's complaint is that the sentence imposed upon his client has, in the present case, neither been ' confirmed by the High Court, nor by H.E.H. the Nizam.
This, he says, is a discrimination which has vitally prejudiced his client and does afford a ground for setting aside the sentence in its entirety.
admits of no dispute that section 8 of Regulation X of 1359F. must be held to be invalid under articles 13(1) and 14 of the Constitution to the I extent that it takes away the provision relating to confirmation of sentences as is contained in the Hyderabad Criminal Procedure Code.
This, however, is a severable part of the section and being invalid, the provisions of the Hyderabad Criminal Procedure Code with regard to the confirmation of sentences must be followed.
Those provisions, however, do not affect in any way the procedure for trial laid down in the Regulation.
All that section 20 of the Hyderabad Criminal Procedure Code lays down is that sentences of particular description should not be executed unless assent of certain authorities to the same is obtained.
The proper stage, therefore, when this, section comes into operation.
is the stage of the execution of the sentence.
The trial or conviction of the accused is not affected in any way by reason of the withdrawal of the provision relating to confirmation of sentences in the Regulation.
The withdrawal is certainly inoperative and in spite of such withdrawal the accused can insist on the rights provided 'for under the general law.
In the case before us the records show that no reference was made by the Special Judge after he passed the sentence of death upon the appellant in the manner contemplated by section 307 of the Hyderabad Code, which corresponds to section 374 of the Indian Criminal Procedure Code.
There was, however, an appeal preferred by the accused and the entire file of the case came up before the High Court in that connection.
As said already, the Division Bench, which heard the appeal, was divided in its 672 opinion and consequently no question of confirmation of the death sentence could or did arise before that Bench.
The question was, however, specifically raised towards the conclusion of the arguments before the third Judge, to whom it was referred; and it is significant to note that some time before that a Full Bench of the Hyderabad High Court had decided that the provision in the Regulation relating to confirmation of sentences was void and inoperative and consequently in spite of the said provision the sentences were required to be confirmed in accordance with the general law.
The question was then raised whether the confirmation was to be made by the third Judge alone or it had to be done by the two Judges who agreed in dismissing the appeal.
Mr. Justice Manohar Prasad decided that as the whole case was referred to him, he alone was competent to make the order for confirmation of the death sentence and he did actually confirm it by writing out in his own hand the order passing the sentence of death according to the provision laid down in the Hyderabad Code.
Mr. Peerbhoy contends that this confirmation was illegal and altogether invalid as not being made in conformity with the provisions of the Hyderabad Code.
We do not want to express any opinion on this point at the present moment.
There appears on the face of the record an order for confirmation of the death sentence made by a Judge of the High Court.
If this order is not in conformity with the provisions of law, the question may be raised before this court when the appeal comes up for hearing I on its merits.
This is, however, not a matter which affects the constitutional question with which only we are concerned at the present stage.
Under section 20 of the Hyderabad Code, as mentioned above, a death sentence could not be executed unless the assent of H.E.H. the Nizam was obtained.
Mr. Peerbhoy points out that this has not been done in the present case.
To that the obvious reply is that consent of H.E.H. the Nizam is necessary only before the sentence is executed, and that stage apparently 673 has, not arrived as yet.
The final judgment of the High Court in this case was passed on 11th December, 1950.
There was an application for leave to appeal presented by the accused immediately after that date and this application was rejected on 2nd January, 1951.
On the 5th of February, 1951, an application for special leave was made to this court and the execution of the death sentence was stayed during this period under orders of the High Court itself.
The special leave was granted by this court on 11th May, 1951, and the carrying out of the death sentence has been stayed since then under our orders, pending the disposal of the appeal.
The question as to whether any further confirmation by H.E.H. the Nizam is necessary could only arise if and when the death sentence passed by the courts below is upheld by this court.
Mr. Peerbhoy points out that since the 1st April, 1951, the Indian Criminal Procedure Code has been introduced in the State of Hyderabad and there is no power in the Nizam now to confirm a sentence of death, although such confirmation was necessary at the time when the sentence was pronounced both by the Special Judge as well as by the High Court on appeal.
We do not think that it is at all necessary for us at the present stage to discuss the effect of this change of law.
If the assent of the Nizam to the execution of a death sentence is a matter of procedure, it may be argued that the procedural law which obtains at the present moment is the proper law to be applied.
On the other hand, if it was a question of substantive right, it may be open to contention that the law which governed the parties at the date when the trial began is still applicable.
We are, however, not called upon to express any opinion on this point and we deliberately decline to do so.
We also do not express any opinion as to whether the rights which could be exercised by the Nizam under section 20 of the Hyderabad Criminal Procedure Code were appurtenant to his prerogative as a sovereign or were statutory rights exercisable by the person designated in the statute.
These matters 674 may be considered when the appeal comes up for final hearing on the merits.
Our conclusion is that there has not been any discrimination in matters of procedure in this case which can be said to, have affected f the trial prejudicially against the accused and the accused is not entitled to 'have his conviction and sentence set aside on that ground.
The other question raised by the appellant relates to delegation of the authority by the Chief Minister to make over cases for trial by the Special Judge.
Mr. Peerbhoy lays 'stress on section 5 (b) of the Regulation which speaks of offences being " made over to the Special Judge for trial by the Chief Minister or by a person authorised by the chief Minister in this behalf ", and it is argued that this section requires that the delegatee is to be mentioned by name.
What the Chief Minister has done is that he issued a notification authorising all civil administrators of the districts to exercise within their respective jurisdictions the powers of the Chief Minister under the said section.
This, it is argued, is not in compliance with the provisions of the section.
We do not think there is any substance in this contention.
The delegates can certainly be described by reference to his official designation and the authority may be vested in the holder of a particular office for the time being.
This, we think, is quite a proper and convenient way of delegating the powers which are exercisable by the Chief Minister.
In our opinion, the constitutional points raised by Mr. Peerbhoy fail.
The application under article 32 of the Constitution is thus rejected and the case is directed to be posted in the usual course for being heard on its merits.
GHULAM HASAN J. I concur in the order proposed by my learned brother Mr. Justice Mukherjea that the petition under article 32 of the Constitution be dismissed, but I deem it necessary to make a few observations in view of my dissenting judgment in Qasim Razvi 's case(1).
The majority judgment delivered by Mr. Justice Mukherjea on the.
19th January, 1953, in (1) [1952] S C R, 710.
675 Qasim Razvi 's case(1) while interpreting the decision in Lachmandas Kewalram Ahuja vs The State of Bombay(1) laid, down the principle that the mere fact that some of the provisions of the impugned Regulation are discriminatory on the face of it, is not sufficient to render the trial and the conviction void under article 14, read with article 13 (1) of the Constitution and that in such cases where the trial is continued after the 26th January, 1950, under the impugned Regulation, it is necessary to see whether the procedure followed after the material date was such as deprived the accused of the equal protection of laws within the meaning of article 14 of the Constitution and that if the accused under such procedure received substantially the benefits of the trial under the ordinary law, the trial and conviction cannot be held as void and illegal.
I take it that the majority decision is binding and that the principle enunciated by the majority is no longer open to question.
With this preliminary observation I must proceed to express my concurrence generally with the view taken by my learned brother Mr. Justice Mukherjea in the present case.
It is to be borne in mind that Regulation V of 1358 F. under which the Tribunal was constituted to try Qasim Razvi 's case was in material respects different from Regulation X of 1359 F. under which the Special Judge tried the petitioner Habeeb Mohammad.
I agree with my learned brother in holding that there was no flaw in making over the case of the petitioner for trial to the Special Judge under section 5 (b) of the Regulation.
The Special Judge took cognizance of the case before the Constitution came into force, but the entire evidence of the prosecution, unlike Qasim Razvi 's case, was recorded after the 26th of January, 1950.
The Regulation in question was challenged before us as being void under article 14 read with article 13(1) of the Constitution on the following grounds: (1) (2) 676 (1) that the Regulation excludes the committal proceedings, (2) that the procedure of the sessions trial is replaced by the warrant procedure, (3) that there is no right of transfer, (4) that there is no revision, (5) that the right of confirmation by the Nizam in case of sentences of death has been negatived.
As regards the first two grounds, Mr. Justice Mukherjea, following the view taken in Qasim Razvi 's case(1) has held that under section 267A 'of the Hyderabad Criminal Procedure Code committal proceedings are not compulsory and that there is no substantial difference , between the sessions trial and the warrant procedure which was followed in the petitioner 's case.
These two grounds of attack there.
fore disappear.
So far as grounds Nos.
(3) and (4) are concerned, I agree with Mr. Justice Mukherjea in his interpretation of section 8 of the Regulation and hold in concurrence with the view taken by him that the right to apply for transfer has not been taken away and that the right of revision has been denied only in so far as non appealable sentences are concerned.
The present is a case of murder and other serious offences which are undoubtedly all appealable.
The only discriminatory feature of the Regulation left therefore is that no sentence of a Special Tribunal shall be subject to or submitted for confirmation by any authority whatsoever contained in section 7 (2) of Regulation V of 1358F which is made applicable,under section 8 of Regulation X of 1359 F., in other words, that the right of the Nizam to confirm the death sentence has been taken away.
This is un questionably a valuable right available to the accused who is sentenced to death by the Sessions Judge or the High Court as the case may be.
We were told by Mr. Peerbhoy, counsel for the petitioner, that no death sentence passed by the ' courts in Hyderabad during the last 50 years or go has ever been carried into effect and that the Nizam has always exercised (1) , 677 this right in favour of commuting the death sentence to.a sentence for life.
The denial of this right in the Regulation is discriminatory on the face of it and deprives the petitioner of a valuable right.
I concede, however, that this objectionable feature of the Regulation is severable from the other parts.
I further agree that the stage for the exercise of that right has not yet arisen, for the appeal of the petitioner is still pending in this court.
If the appeal is allowed, or the sentence is reduced, no question of the confirmation of the death sentence by the Nizam will arise.
If, however, the appeal is dismissed, it will be open to the petitioner to claim this right.
It would not be desirable at this stage to express an opinion whether this right is a substantive right which vests in the petitioner or one relating to a more matter of procedure, as that question will have to be considered and decided when the appropriate stage arrives.
I would, therefore, agree in dismissing the petition.
Petition dismissed.
Agent for the petitioner: Bajinder Narain.
Agent for the respondent : G. H. Rajadhyaksha.
| In determining the validity or otherwise of a pre Constitution statute on the ground of any of its provisions being repugnant to the equal protection clause of the Constitution, two principles 86 662 have to be borne in mind.
Firstly, the clause bag no retrospective effect and even if the law is in any sense discriminatory, it must be held to be valid for all past transactions and for, enforcement of rights and liabilities accrued before the coming into force of the Constitution.
Secondly, article 13 (1) of the Constitution does not necessarily make the whole statute invalid even after the advent of the Constitution.
It invalidates only those provisions which are inconsistent with the fundamental rights guaranteed under Part III of the Constitution.
Further, the fact that trial was continued even after 26th January, 1950, under the earlier Regulation which is in some respects discriminatory would not necessarily render the subsequent proceedings invalid.
All that the accused could claim is that what remains of the trial must not deviate from the normal standard in material respects, so as to amount to a denial of the equal protection of laws within the meaning of article 14 of the Constitution.
For the purpose.
of determining whether the accused was deprived of such protection, the Court has to see first of all whether after eliminating the discriminatory provisions in the Regulation, it was still possible to secure to the accused substantially the benefits of a trial under the ordinary law; and if so, whether that was actually done in the particular case.
On the 5th January, 1950, the case of the accused who was charged with murder, arson, rioting and other offences which was pending before a Special Tribunal was made over to a Special Judge in pursuance of the provisions of the Hyderabad Regulation X of 1359 F., which abolished the Special Tribunal Regulation of 1949.
The trial commenced on the 11th February, 1950, after the new Constitution came into force and the accused was convicted and sentenced to death.
His appeal was dismissed and the sentence of death was ultimately confirmed by the High Court.
It was contended that the entire trial was illegal inasmuch as the Regulation under which the accused was tried contained several provisions which were in conflict with the equal protection clause (article 14) of the Constitution and became void after the 26th January 1950.
Held, (1) The provisions in the Regulation eliminating committal proceedings and substituting the warrant procedure for sessions procedure in the trial of offences did not render the trial illegal as the committal proceeding was not an indispensable preliminary to a sessions trial under the Hyderabad Criminal Procedure Code.
(2) On a proper interpretation of section 8 of the Regulation the right of an accused to apply for transfer of his case was not taken away and the right of revision was taken away only in respect of non appealable sentences.
(3)Section 8 of the Regulation was void in so far as it took away the provisions relating to confirmation of sentences but as this part of the Regulation was severable from the remaining 663 portion of the section the provisions of the Hyderabad Criminal Procedure Code relating to confirmation of sentences could be followed, and those provisions did not in any way affect the procedure for trial laid down in the Regulation.
(4)The fact that the Nizam 's consent had not been obtained could not vitiate the trial as such consent is necessary only before execution of the sentence.
Held also, that the delegation of the authority of the Chief Minister to make over cases for trial to the Special Judge, by a general notification authorising all civil administrators of the districts to exercise within their respective jurisdictions the powers of the Chief Minister under section 5 (b) was not invalid.
Section 5 (b) does not require that the delegatee must be mentioned by name.
Qasim Bazvi 's case ([1953] S.C.R. 589) applied.
|
Appeal No. 65 of 1953.
Appeal by special leave granted by the Supreme Court on 13th March, 1953, from the Judgment and Order dated the 30th July, 1951,.
of the Custodian General of Evacuee Property in No. 31 A/Judi./50.
Petition No. 247 of 1952, a petition under Article 32 of the Constitution for enforcement of fundamental rights, and Petition for Special Leave to Appeal No. 106 of 1952 were also beard along with Civil Appeal No. 66 of 1953.
692 K.T. Desai for the appellants and petitioners.
C.K. Daphtary, Solicitor General for India (Porus A.Mehta with him) for the respondent in Petition No. 247. 1953.
April 10, The Judgment of the Court was delivered by GHULAM HASAN J.
In order to understand and appreciate the point arising for consideration in this case, it will be necessary to set out a few preliminary facts : One Aboobaker Abdul Rehman, a resident of Bombay, received on December 16, 1949, from the Additional Custodian, Bombay, a notice under section 7 of Ordinance No. XXVII of 1949 calling upon him to show cause why his interest in certain specific property should not be declared to be evacuee property.
A further notice issued on January 11, 1950, required him to show cause why he should not be declared an evacuee and all his properties declared to be evacuee properties.
On February 8, 1950, the Additional Custodian decided that Aboobaker was not an evacuee, but at the same time issued a fresh notice to him under section 19, requiring him to show cause why he should not be declared an "intending evacuee" and on the following day, February 9, he declared Aboobaker as an "intending evacuee" upon the same evidence.
Aboobaker does, not appear to have contested this order, but one Tek Chand Dolwani, first informant, carried the matter in appeal to the Custodian General, praying that Aboobaker be declared an evacuee and that the Imperial Cinema, one of his properties, be allotted to him.
The Ordinance expired on October 18, 1949, and was replaced by Act XXXI of 1950 (The ) which came into operation on April 17, 1950.
It is not denied that although the Ordinance was repealed by section 58, the proceedings taken in the exercise of any powers conferred by the Ordinance shall be deemed to have 693 been taken in the exercise of the powers conferred by the Act as if the Act were in force on the day the proceedings were taken.
The appeal was heard on May 13, 1950, when the preliminary objections in regard to the maintainability of the appeal were argued and the appeal was adjourned to May 15 for orders.
On May 14, Aboobaker died leaving him surviving three son and 9 daughter as his heirs under the Mohammedan law, the sons taking 2/7th share each and the daughter 1/7th.
On May 15, the Custodian General pronounced the order which was, however,, dated May 13.
By this order he dismissed the preliminary objections and directed that further enquiries should be made and that Aboobaker be examined further on August 19, 1950.
The hearing of the appeal was adjourned from time to time and was fixed for final disposal on March 7, 1951.
Notice of this hearing was issued to Ebrahim Aboobaker (son) and Hawabai Aboobaker (daughter) who owned between themselves 3/7th share to appear as the heirs and legal representatives of the deceased.
The petitioners, who are residents of India their two brothers are said to have migrated to Pakistan filed on February 26, 1951, Miscellaneous Petition No. 15 of 1951, in the Punjab High Court for a writ of prohibition or for directions or order directing the Custodian General to forbear from proceeding with the hearing of the appeal or making any order in the said appeal or from declaring the properties left by the deceased as evacuee properties.
The petitioners contended inter alia that after the death of Aboobaker the Custodian General had no jurisdiction to proceed with the appeal.
The petition was dismissed on May 24, 1951, the High Court holding that the Custodian General had jurisdiction.
Leave to appeal was granted but the High Court did not stay the hearing of the appeal by the Custodian General which was fixed for July 3, 1951, and directed that the Custodian General should not pass final orders until July 23, 1951.
On ,July 3, the Custodian General heard the appeal and 90 694 on July 30 which was the date fixed for final orders he declared Aboobaker to be &a evacuee and his properties to be evacuee properties.
On August 6, 1951, the petitioners filed a petition (Miscellaneous Petition No. 191 of 1951) under article 226 of the Constitution in the Bombay High Court against the Custodian General and the Custodian, Bombay, for a writ of certiorari for quashing and setting aside the said order and for an order directing the Custodian General and the local Custodian from acting upon the order or from taking possession of the property which was situate in Bombay.
The petition was dismissed by Shah J. on October 4, 1951, on the ground that the Bombay High Court had no jurisdiction against the Custodian General and that the petition against the local Custodian was premature.
Appeal No. 88 of 1951 was filed on October 5, 1951 against the said order to the Bombay High Court.
An interim order was passed whereby the petitioners undertook to keep accounts and not to dispose of the properties while the Custodian General gave an undertaking not to take possession pending the hearing of the appeal.
The appeal came up for hearing on November 20, 1951, before the Chief Justice and Gajendragadkar J. but it was allowed to stand over with a view to await the decision of this Court in appeal against the order of the Punjab High Court as they did not wish to pass any order which might conflict with the decision of this court.
That appeal was dismissed by this Court on May 26, 1952.
See Ebrahim Aboobaker and Another vs Custodian General of Evacuee Property(1).
This Court decided only the preliminary point that Tek Chand Dolwani was entitled to prefer an appeal but left the question about the jurisdiction of the Custodian General to declare the properties of Aboobaker as evacuee properties after his death open as that question was not raised before it, the order of the 30th July, 1951, having been passed after the filing of the appeal in the Supreme Court and also because that question (1) ; 695 was pending determination in the appeal before the Bombay High Court.
Appeal No. 88 of 1951 was dismissed on 1st/2nd July, 1952, by the Chief Justice and Gajendragadkar J. on the preliminary ground that they had no jurisdiction to quash the order of the Custodian General passed on 30th July,1951.
They declined to pass any order against the local Custodian observing that they could not do indirectly what could not be done directly.
A petition for leave to appeal was also rejected by the High Court on the 14th July, 1952.
Petition No. 105 of 1952 is for special leave to appeal against the order of the Custodian General dated July 30, 1951.
Petition No. 106 of 1952 is against the order of the Appellate Bench of the Bombay High Court dated 1st/2nd July, 1952.
Petition No. 247 of 1952 is an independent petition under article 32 of the Constitution, challenging the order of the Custodian General dated July 30, 1951, as being in violation of the fundamental rights of the petitioners and being without jurisdiction.
Tek Chand Dolwani has filed a caveat against the Petition No. 105 of 1952, while the petition under article 32 has been heard upon notice to the Custodian General.
In this petition it is submitted that on a true construction of the relevant provisions of the Ordinance and the , the Custodian General had no jurisdiction to hear the appeal after the death of Aboobaker, or to make any order declaring the properties left by him to be evacuee properties as the appeal abated on his death and the properties vested in specific shares in his heirs under the Mohammedan law.
It was urged that as the said properties did not fall within the definition of evacuee property on the 30th July, 1951, or at any time after the death of Aboobaker, the Custodian General had no jurisdiction to declare the properties to be evacuee properties.
As a matter of fact, the deceased had no right, title or interest in the said properties after his death; nor were the said properties acquired by his heirs by any mode of transfer 696 from the deceased.
The order of the 30th July, 1951, is challenged as being void and inoperative as it violates the fundamental rights of the petitioners under articles 19(1) (f) and 31 (1) of the Constitution.
The petitioners pray for the issue of a writ of certiorari against the Custodian General calling for the records of the case relating to the above order and after looking into the same and going into the question of the legality thereof quash and set aside the same.
They also ask for a writ of prohibition or mandamus or directions or an order or a writ directing the Custodian General, his servants and agents to for bear from acting upon or enforcing the order dated the 30th July, 1951, or from taking any steps or proceedings in enforcement of the same.
We heard the petitioners and the Solicitor General on the petition under article 32 and reserved orders till we had beard Dolwani who was the caveator in the application for special leave to Appeal.
Dolwani,was served with a notice personally and through his agent but neither put in appearance.
We granted the application for leave to appeal against the order of the Custodian General and directed the appeal to be posted for hearing along with the application under article 32.
Dolwani again did not appear and we ' proceed, therefore, to dispose of the appeal and the petition by a common judgment.
The crucial question which arises for consideration before us is whether a person can be declared an evacuee after his death and whether the properties which upon his death vest in his heirs under the Mohammedan law can be declared evacuee properties.
Before we proceed to determine that question we must notice the objection raised by the Solicitor General about the maintainability of the petition under article 32 of the Constitution.
He contends that there is no question of any infraction of fundamental right in the present case as the petitioners have not been deprived of any property without the authority of law.
The Custodian General, it is said, undoubtedly purported to act under an express statutory enactment.
He might have misapplied or 697 misappreciated the law or committed an error in the assumption or exercise of jurisdiction, but that would not bring the case within the purview of article 31 (1 read with article 19(1) (f) of the Constitution.
The point is debatable and we do not desire to express any opinion upon this point as we propose to examine the validity of the order of the Custodian General dated July 30, 1951, in the appeal (Civil Appeal No. 65 of 1953) which arose out of Petition No. 105 of 1952 for special leave and not on the petition under article 32.
Section 2 (d) and (f) define "evacuee" and " 'evacuee property" respectively as follows: (d) "Evacuee " means any person (i) who, on account of the setting up of the Dominions of India and Pakistan or on account of civil disturbances or the fear of such disturbances, leaves or has ' on or after the 1st day of March, 1947, left, any place in a State for any place outside the territories now forming part of India,or (ii) who is resident in any place now forming part of Pakistan and who for that reason is unable to occupy, supervise or manage in person his property in any part of the territories to which this Act extends, or whose property in any part of the said territories has ceased to be occupied, supervised or managed by any person or is being.
occupied, supervised or managed by an unauthorised person, or (iii) who has, after the 14th day of August, 1947, obtained, otherwise than by way of purchase or exchange, any right to, interest in or benefit from any property which is treated as evacuee or abandoned property under any law for the time being in force in Pakistan ; (f) " Evacuee property " means any property in which an evacuee has any right or interest (whether personally or as a, trustee or as a beneficiary or in any other capacity), and includes any property (1) which has been obtained by any person from an evacuee after the 14th day of August, 1947, by 698 any mode of transfer, unless such transfer has been confirmed by the Custodian.
The use of the present tense "leaves" or "has left" in the definition of evacuee and " has " in the definition of evacuee property is relied upon in support of the contention that the object of the legislature in enacting these provisions was to confine their operation to a living person only.
This line of argument may not per se be of any compelling force but it receives support from the rest of the provisions of the Act to which reference will be made hereafter.
It may, however, be pointed out here that clause (f) (1) will not apply to the case of the petitioners for they do not claim the property from the evacuee after the 14th day of August, 1947, by any mode of transfer but by right of succession under the Mohammedan law.
Succession to property implies devolution by operation of law and cannot appropriately be described as mode of transfer, as contended for by the Solicitor General, which obviously contemplates a transfer inter vivos.
Section 7 refers to the notification of the evacuee property.
It lays down that "where the Custodian a of opinion that any property is evacuee property within the meaning of this Act, he may, after causing notice there of to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into ' the matter as the circumstances f the case permit, pass an order declaring any such property to be evacuee property.
" Rule 6, which is framed in exercise of the powers conferred by section 56 of the Act, lays down the manner of inquiry under section 7 and is as follows:" `` (1) Where the Custodian is satisfied from information in his possession or otherwise that any property or an interest therein is prima facie evacuee property, he shall cause a notice to be served, in Form No. 1, on the person claiming title to such property or interest and on any other person or persons whom he considers to be interested in the property.
699 (2) The notice shall,as far as practicable,mention the grounds on which the property is sought to be declared evacuee property and shall specify the provision of the Act under which the person claiming any title to, or interest in, such property is alleged to be an evacuee.
(3) The notice shall be served personally, but if that is not practicable the service may be effected in any manner provided in rule 28.
(This rule refers to a mode of substituted service).
(4) Where a notice has been duty served, and the party called upon to show cause why the, property should not be declared an evacuee property, fails to appear on the date fixed for hearing, the Custodian may proceed to hear the matter ex parte and pass such order on the material before him as he deems fit.
(5) Where such party appears and contests the notice he shall forthwith file a written statement verified in the same manner as a pleading under the Code of Civil Procedure, 1908, stating the reasons why he should not be deemed to be an evacuee and why the property or his interest therein should not be declared as evacuee property.
Any person or persons claiming to be interested in the enquiry or in the property being declared as evacuee property, may file a reply to such written statement.
The Custodian shall then, either on the same day or on any subsequent day to which the hearing may be adjourned, proceed to hear the evidence, if any, which the party appearing to show cause may produce and also evidence which the party claiming to be interested as mentioned above may adduce.
(6) After the whole evidence has been duly recorded in a summary manner, the Custodian shall proceed to pronounce his order.
The order shall state the points for determination, and the findings thereon with brief reasons.
" Form No. 1 in Appendix A to the rules is as follows; .
700 "WHEREAS there is credible information in possession of the Custodian that you are an evacuee under clause (iii) of section 2(d) of the on account of the grounds mentioned below: AND WHEREAS it is desirable to hear you in person ; Now, therefore, you are hereby called upon to show cause (with all material evidence on which you wish to rely) why orders should not be passed declaring you an evacuee and all your property as evacuee property under the provisions of the said Act.
Deputy Custodian.
" Assistant The next important section is section 8 the relevant portion of which is as follows: "(1) Any property declared to be evacuee property under section 7 shall be deemed to have vested in the Custodian for the State, (a) in the case of the property of an evacuee as defined in sub clause (i) of clause (d) of section 2, from the date on which he leaves or left any place in a State for any place outside the territories now forming part of India; ' ' If we substitute in section 8 the definition of evacuee property given in section 2, the meaning of section 8 will become clearer.
Any property declared to be : (i) property in which an evacuee has any right or interest, (ii) property which has been obtained by any person from an evacuee after the 14th of August, 1947, by any, mode of transfer unless that transfer has been confirmed by the Custodian under section 7, shall be deemed to have vested in the Custodian for the State : (a) in the case of the property of an evacuee as defined in sub clause (i) of clause (d) of section 2, 701 from the date on which he leaves or left any place in a State for any place outside the territories now forming part of India.
" The language of the rule read with the Form given above, the notice issued to the person claiming interest in the property which, according to the information in the possession of the Custodian, is prima facie evacuee property, the manner of its service and the mode of inquiry, lead to the unmistakable conclusion that the object of section 7 was to take proceedings against a living person and to that extent the use of the present tense in the definition of "evacuee" and "evacuee property" lends corroboration to the contention raised that the proceedings are intended to be applicable to living persons only.
The property which is declared to vest under (i) must be one in which an evacuee has any right or interest but the deceased has no right or interest after his death as his property vests in his heirs.
Nor does (ii) apply as petitioners have not obtained the property from an evacuee by any mode of transfer.
It is obvious that property must be declared to be evacuee property under section 7 before it can vest under section 8.
There is no doubt that when the property does so vest the vesting takes effect retrospectively, but where the man dies before any such declaration is made, the doctrine of relation back cannot be invoked so as to affect the vesting of such property in the legal heirs by operation of law.
To take a simple illustration, if a person leaves India after the 1st of March, 1947, the date given in section 2(d), and dies in Pakistan before any notice is issued to him under section 7 and before any inquiry is held in pursuance thereof, it is obvious that the heirs, who have succeeded to his property, cannot be deprived of it by conducting an inquiry into the status of the deceased and investigating his right or interest in property which has already devolved on legal heirs.
Section 8 in such a case will not come into play and there can be no vesting of the property retros pectively before such property is declared as evacuee 91 702 property within the meaning of section 2(f) of the Act.
Reading sections 7 and 8 together it appears that the Custodian gets dominion over the property only after the declaration is made.
The declaration follows upon the inquiry made under section 7, but until the proceeding is taken under section 7, there can be no vesting of the property and consequently no right in the Custodian 'to take possession of it.
Now if the alleged evacuee dies before the declaration, has the Custodian any right to take possession of the property? If he cannot take possession of the property of a living person before the declaration, by the same token he cannot take possession after the death of the alleged evacuee when the property had passed into the hands of the heirs, The enquiry under section 7 is a condition precedent to the making of a declaration under section 8 and the right of the Custodian to exercise dominion over the property does not arise until the declaration is made.
There is no reason therefore why the heirs should be deprived of their property before the Custodian obtains dominion.
The matter may be looked at from another point of view.
Section 141 of the Civil Procedure Code which makes the procedure of the Court in regard to suits applicable in all proceedings in any Court of civil jurisdiction does not apply, as the Custodian is not a Court, though the proceedings held by him are of a quasi judicial nature.
, Section 45 of the Act applies the provisions of the Code only in respect of enforcing the attendance of any person and examining him on oath and compelling the discovery and production of documents.
The provisions of the Code relating to substitution are, therefore, inapplicable and there is no other provision in the Act for the heirs to be substituted in place of the deceased so as to continue proceedings against them.
If the proceedings cannot be continued against the heirs upon the death of the alleged evacuee, it is logical to hold that they cannot be 703 initiated against them.
We hold, therefore, that the proceedings must lapse upon the death of such person.
There is no provision in the Act that after a man is de ad, his property can be declared evacuee property.
If such a provision had been made, then the vesting contemplated in section 8 of the Act would have by its statutory force displaced the vesting of the property under the Mohammedan law in the heirs after death.
It is a well recognised proposition of law that the estate of a deceased Mohammedan devolves on his heirs in specific shares at the moment of his death, and the devolution is neither suspended by reason of debts due from the deceased, nor is the distribution of the shares inherited postponed till the payment of the debts.
It is also well understood that property vests in the heirs under the Mohammedan law, unlike the Indian Succession Act, without the intervention of an administrator.
Section 40 of the Act imposes a restriction upon the right of an evacuee to transfer property after the 14th August, 1947.
This section prohibits transfers inter vivos but cannot affect devolution by operation of law such as, on death According to this section where the property of a person is notified or declared to be an evacuee property, he cannot transfer that property after the 14th of August, 1947, so as to confer any right on the transferee unless it is confirmed by the Custodian.
This shows that a transfer between the 1st of March and the 14th of August, 1947, is immune from the disability of being treated as evacuee property notwithstanding the fact that the transferor migrated after the 1st of March.
If he made a bonafide transfer of his entire property before the 14th of August,,1947, then the property does not acquire the character of evacuee property and such a transfer does not require.
confirmation by the Custodian, although all transfers after that date are held suspect.
If the transfer between the two crucial dates is held valid, then on a parity of reasoning the death of the transferor before the declaration after the 14th of August should lead to the same result.
704 It was contended before us that the Act aims at fixing the nature of the property from a particular date and that the proceedings taken are against the property and not against the person.
This argument is fallacious.
There can be no property, evacuee or otherwise, unless there is a person who owns that property.
It is the property of the owner which is declared to be evacuee property by reason of the fact that he is subject to disability on certain grounds.
The definition of evacuee property in the Act begins by Baying "property in which an evacuee has any right or interest in any capacity".
The Act also shows that the property cannot be notified as evacuee property unless and until the.
person claiming interest in it has been given notice.
Reference may also be made to section 43 as indicating that the declaration under section 8 was intended to be made during the lifetime of the alleged evacuee.
This section lays down "where in pursuance of the provisions of this Act any property has vested in the Custodian neither the death of the evacuee at any time thereafter nor the fact that the evacuee who had a right or interest in that property had ceased to be an evacuee at any material time shall affect the vesting or render invalid anything done in consequence thereof." The section shows that where the property has vested in the Custodian, then the death of the evacuee or his ceasing to be an evacuee afterwards shall not affect the vesting or render invalid anything done in consequence thereof.
The section seems to suggest that the vesting must take place in the lifetime of the alleged evacuee, otherwise there was no point in providing that the vesting will not be affected by the death of the evacuee or the evacuee ceasing to be so.
The Solicitor General contended that section 43 embodies the principle "once an evacuee always an evacuee",, This conclusion is hardly justified on the terms of section 43 as explained above and it finds no support from the other provisions of the Act.
The object and the scheme of the Act leave little doubt 705 that the Act was intended, as its title shows, to provide for the administration of evacuee property and it is common ground that this property has ultimately.
to be used for compensating the refugees who had lost their, property in Pakistan.
The Act contains elaborate provisions as to how the administration is to be carried out.
Section 9 enables the Custodian to take possession of the evacuee property vested in him under section 8 and section 10 which defines the powers of the Custodian generally enables him to take such measures as he considers necessary or expedient for the purposes of administering, preserving and managing any evacuee property.
These are mentioned in detail in sub section (2) of section 10, clause (j), which authorises the Custodian to institute, defend or continue any legal proceedings in any civil or revenue Court on behalf of the evacuee.
, Section 15 imposes an obligation on him to maintain a separate account of the property of each evacuee.
Section 16 empowers the Custodian to restore the evacuee property upon application to the evacuee or any person claiming to be his heir provided he produces a certificate from the Central Government that the evacuee property may be restored to him.
Upon restoration the Custodian shall stand absolved of all responsibilities in respect of the property so restored, but such restoration shall not prejudice the rights, if any, in respect of the property which any other person may be entitled to enforce against the person to whom the property has been so restored.
By section 62 of the Act it is open to the Central Government by notification in the Official Gazette, to exempt any person or class of persons or any property or class of property from the operation of all or any of the provisions of this Act.
In pursuance of this section the Central Government issued Notification No. S.R.O. 260, dated the 3rd July, 1960, which was published in the Gazette of India, Part II, section 3, 706 dated the 15th July, 1950, page 254, in which broadly three categories of persons were exempted: (a) Any person who on or after the 1st day of March, 1947, migrated from India to Pakistan but had returned to India before the 18th day of July, 1948, and had settled therein ; (b) Any person who has left or leaves for Pakistan on a temporary visit taking with himself a "No objection to return" certificate, and has returned, or returns, to India under a valid permit issued under the Influx from Pakistan (Control) Act, 1949, for permanent return to India; and (c) Any person who has come from Pakistan to India before the 18th day of October, 1949, under 'a valid permit issued under the Influx from Pakistan (Control) Act, 1949, for permanent resettlement in India.
These provisions far from suggesting that the person declared an evacuee suffers a civil death and remains an evacuee for all time show on the other hand that the person may cease to be an evacuee under certain circumstances that he is reinstated to his original position and his property restored to him subject to certain conditions and without prejudice to the rights if any in respect of the property which any other person may be entitled to enforce against him.
These provisions also establish that the fact of a property being evacuee property is not a permanent attribute of such property and that it may cease to be so under given conditions.
The property does not suffer from any inherent infirmity but becomes evacuee property because of the disability attaching to the owner.
Once that disability ceases, the property is rid of that disability and becomes liable to be restored to the owner.
Mr. Desai counsel for the petitioner referred in the course of the arguments to section 93 of the Presidency Towns Insolvency Act and section 17 ' of the Provincial Insolvency Act.
According to the former "if a debtor by or against whom an insolvency petition has been presented dies, the proceedings in the 707 matter shall, unless the Court otherwise orders, be continued as if he were alive".
By the latter section "if a debtor by or against whom an insolvency petition has been presented dies, 'the proceedings in the matter shall, unless the Court otherwise orders, be continued so far as may be necessary for the realisation and distribution of the property of the debtor".
Though there is slight difference in the language of these two sections, the principle underlying the insolvency law seems to be that the death of the insolvent during the pendency of the application for insolvency does not cause the proceedings to abate but that they must be continued so that his property could be administered for the benefit of the creditors.
There is no such provision in, the Act before us.
It follows therefore that if the intention of the legislature had been to treat the person proceeded against under section 7 as alive for purposes of the proceedings even after his death, such a provision would have been incorporated into the Act.
After giving our best consideration to the case we are of opinion that the order of the 30th July, 1951, passed by the Custodian General declaring Aboobaker Abdul Rehman deceased as an evacuee and the property left by him as evacuee property cannot stand and must be set aside.
We accordingly allow Appeal No. 65 of 1953, arising out of Petition No. 105 of 1952 and hold that the Custodian General had no jurisdiction to pass the order of the 30th July, 1951, and set it aside.
We make no order as to costs.
Petition No. 106 of 1952 is not pressed and no order need be passed in respect thereto.
In view of our order in Appeal No. 65 of 1953, no orders are called for in Petition No. 247 of 1952.
Appeal allowed.
Agent for the appellants and petitioners : Rajinder Narain.
Agent for the respondent in Petioion No. 247: G. H. Rajadhyaksha.
| Where a Mohammedan against whom proceedings are commenced under the , for declaring him an evacuee and his properties evacuee properties dies during the pendency of the proceedings he cannot be declared an evacuee after his death, and his properties which on his death vest in his heirs under the Mohammedan law cannot be declared evacuee properties.
|
iminal Appeals Nos. 26 and 27 of 1952.
Appeals under Article 134 (1) (c) of the Constitution of India from the Order dated 4th February, 1952, of the Calcutta High Court (CHAKRAVARTTI and SINHA JJ.) in Criminal Revision Nos. 102 and 103 of 1952.
S.C. Das Gupta and A.K. Dutt for the appellants.
B. Sen for the respondent.
Arun Kumar Datta for the complainant.
1953, April 10.The Judgment of the Court was delivered by MAHAJAN J.
838 MAHAJAN J.
These two appeals arise in the following circumstances: One Mokshadamoyee Dassi, mother of Dhirendra Nath Bera, died some time in the evening of the 3rd September, 1949.
At the moment of her death Dhirendra Nath was not present at the house.
On his return at, about 8 30 p.m. he along with some other persons took the dead body to the cremation ground.
It appears that Nurul Huda, the appellant in Criminal Appeal No. 27 of, 1952, had lodged information at the police station to the effect that Dhirendra Nath had beaten and throttled his mother to death.
When the funeral pyre was in flames, Nurul Ruda along with the appellants in Criminal Appeal No. 26 of 1952 and accompanied by the sub inspector of police arrived at the cremation ground.
The appellants pointed out the dead body and told the sub inspector that the complainant had killed his mother by throttling her and that there were marks of injury on the body which they could show to the sub Inspector if he caused the body to be brought down from the pyre.
At their suggestion the fire was extinguished and the dead body was taken down from the pyre in spite of the protests from the complainant.
On an examination of the dead body it was found that there were no marks of injury on.
it and the appellants were unable to point out any such marks.
The body was however sent for postmortem examination which was held on 5th September, 1949, but no injury was found on the person of the deceased.
The sub inspector after investigation reached the conclusion that a false complaint had been made against Dhirendra Nath.
On the 24th September, 1949, Dhirendra Nath filed a petition of complaint in the Court of the Sub Divisional Officer of Uluberia in the district of Howrali against the appellants in both the cases and one Sanwaral Huq.
It was alleged in the complaint that the information given by Nurul Huda to the police was false, that Nurul Huda and the other appellants had made imputations mala fide out of enmity against him with the intention of harming his reputation and that to wound his religious feelings they had trespassed on 839 the cremation ground and caused the dead body to be taken out by making false imputations.
The appellants were tried before Shri R. Ray Choudhury, Magistrate 1st class, Uluberia, on charges under sections 297 and 500, Indian Penal Code.
The charges fraimed against them were in these terms : "(1) That you on or about the 17th day of Bhadra, 1356 B.S. at Panshila, P. section Shyampur, with the intention of wounding the religious feelings of P. W. 1, Dhirendra Nath Bera, the complainant, committed trespass upon the cremation ground where the funeral rites of the mother of the complainant were being performed and thereby committed an offence punishable under section 297, Indian Penal Code, and within my cognizance; (2) That you oil or about the 17th day of Bhadra, 1356 B. section at Panshila, P. section Shyampur, defamed P. W. 1, Dhirendra Nath Bera, the complainant, by making imputation to the effect that he had killed his mother intending to harm, or knowing or having reason to believe that such imputation would harm the reputation of the complainant and thereby committed an offence punishable under section 500, Indian Penal Code, and within my cognizance.
" None of these charges relates to the falsity of the report made to the police or contains facts or allegations which disclose an offence under section 182, Indian Penal Code.
The charge under section 297, Indian Penal Code, was a distinct one and concerned an act of the accused committed after the giving of the report.
The charge under section 500 related to defamatory and libellous allegations contained in the report itself.
It was contended on behalf of the defence that Nurul Huda had lodged information with the police tinder a bona fide belief created in his mind on the statement of one Asiram Bibi and that none of the accused persons had entered the cremation ground as alleged by the complainant, 840 The magistrate held the charges proved against all the appellants and convicted each of them under sections 7 and 500, Indian Penal Code.
Each of the appellants was awarded three months ' rigorous imprisonment on the charge under section 297 and each of them was sentenced to a fine of Rs. 100 on the charge under section 500.
The appellants went up in appeal to the Sessions Judge of Howrah who by his order dated 31st July, 1,950, set aside the convictions and sentences and acquitted them.
He held that on the facts stated in the complaint the only offence that could be said to have been committed by the appellants was one under section 182 or section 21 1, Indian Penal Code, and that a court was not competent to take cognizance of those offences except on a complaint by a proper authority under the provisions of section 195, Criminal Procedure Code.
Against the acquittal order an application in revision was preferred to the High Court.
This petition came up for hearing before a Bench of the High Court (K. C. Das Gupta and P. N. Mookerjee JJ.).
The learned judges reached the conclusion that on the facts alleged in the petition of complaint distinct offences under sections 182, 297 and 500, Indian Penal Code, had been disclosed.
They however referred for the decision of the Full Bench the following question: "If the facts alleged in a petition of complaint, or in an information received by the magistrate, on which a magistrate can ordinarily take cognizance of an offence under section 190, Criminal Procedure Code, disclose an offence of which cognizance cannot be taken by the magistrate because of the special provisions of section 195, or 196, or 196 A, or 197, or 199, Criminal Procedure Code, is the magistrate also debarred because of this from taking cognizance of other offences disclosed by the facts alleged, which are not in any way affected by the provisions of section 195, or 1.96, or 196 A or 197 or 199, Criminal Procedure Code.
" The Full Bench answered the question referred in the negative.
In respect of the conviction under 841 section 297, Indian Penal Code, the learned Judges said that there as nothing in sections 195 to 199, Criminal Procedure Code, which could in any way bar the prosecution of the appellants under that section, as it could in no way be said that it arose out of the facts which would constitute an offence under section 182, or section 211, Indian Penal Code.
On the other hand, it arose from an entirely different set of facts, namely, the trespass by the opposite parties in the burial ground and the removal of the corpse from the lighted funeral pyre.
With regard to the offence under section 500, it was observed that though the prosecution for defamation was based on the false information given to a public officer, that circumstance, however, was no bar for the prosecution of the appellants under that section.
In the result the application in revision was allowed, the order of acquittal was set aside and the sessions judge was directed to re hear the appeal on the merits.
After remand the appeal was heard on the merits and was dismissed.
The convictions and sentences passed by the magistrate were confirmed.
Against the order of the sessions judge the appellants went up in revision to the High Court but these applications were summarily dismissed.
The appellants thereupon applied to the High Court for a certificate under article 134 (1) (c) of the Constitution for leave to appeal to this Court.
In the application the order of the Full Bench dated 22nd June, 1951, was challenged.
This application was opposed on behalf of the complainant on the ground that the interim order of the Pull Bench not having, been appealed against could not be challenged at that stage.
Thus two substantial questions were argued in the leave application, namely, 1.whether it was open to the accused to question the correctness of the Full Bench decision, it not having been appealed from when it was passed, and, 2.whether the point decided by the Full Bench in itself was of sufficient importance to justify the granting of a certificate under article 134(1)(c).
109 842 As the judgment of the Full Bench did not terminate the proceedings but merely directed the appeal to be reheard, it was held that the petitioners could not appeal from it at that time and it was open to them to raise the point at this stage.
The second question was considered of sufficient importance to justify the grant of leave and leave was accordingly granted.
The learned counsel for the respondent raised a preliminary objection in order to canvass the first question mentioned above, while the learned counsel for the appellants canvassed the question of the correctness of the decision of the Full Bench on its merits.
He contended that the magistrate had no jurisdiction to take cognizance of the complaint under section 500 and section 297, Indian Penal Code, as the facts disclosed constituted an offence under section 182 which offence could not be tried except on a complaint by a public servant.
Section 195, Criminal Procedure Code, on which the question raised is grounded, provides, inter alia, that no court shall take cognizance of an offence punishable under sections 172 to 188, Indian Penal Code, except on the complaint in writing of the public servant concerned, or some other public servant to whom he is subordinate.
The statute thus requires that without a complaint in writing of the public servant concerned no prosecution for an of fence under section 182 can be taken cognizance of.
It does not further provide that if in the course of the commission of that offence other distinct offences are committed, the magistrate is debarred from taking cognizance in respect of those offences as well.
The allegations made in a complaint may have a double aspect, that is, on the one hand these may constitute an offence against the authority of the public servant or public justice, and on the other hand, they may also constitute the offence of defamation or some other distinct offence.
The section does not per se bar the cognizance by the magistrate of that offence, even if no action is taken by the public servant to whom the false report has been made.
It was however argued that if on the same facts an 843 offence of which no cognizance can be taken under the provisions of section 195 is disclosed and the same facts disclose another offence as well which is outside the purview of the section and prosecution for that other offence is taken cognizance of without the requirements of section 195 having been fulfilled, then the provisions of that section would become nugatory and if such a course was permitted those provisions will stand defeated.
It was further said that it is not permissible for the prosecution to ignore the provisions of this section by describing the offence as being punishable under some other section of the Penal Code.
In our judgment, the contention raised by the learned counsel for the appellants is without any substance so far as the present case is concerned.
The charge for the offence under section 297, Indian Penal Code, could in no circumstance, as pointed out by the High Court, be described as falling within the purview of section 195, Criminal Procedure Code.
The act of trespass was alleged to have been committed subsequent to the making of the false report and all the ingredients of the offence that have been held to have been established on the evidence concern the conduct of the appellants during the post report period.
In these circumstances, no serious contention could be raised that the provisions of section 195 would stand defeated by the magistrate having taken cognizance of the offence under that section.
As regards the charge under section 500, Indian Penal Code, it seems fairly clear both on principle and authority that where the allegations made in a false report disclose two distinct offences, one against the public servant and the other against a private individual, that other is not debarred by the provisions of section 195 from seeking redress for the offence committed against him.
Section 499, Indian Penal Code, which mentions the ingredients of the offence of defamation gives within defined limits immunity to persons making depositions in court, but it is now well settled that immunity is a qualified one and is not absolute as it is in English law.
Under section 198, 844 Criminal Procedure Code, a complaint in respect of an offence under section 499, Indian Penal Code, can only be initiated at the instance of the person defamed, in like manner as cognizance for an offence under section 182 cannot be taken except at the complaint of the public servant concerned.
In view of these provisions there does not seem in principle any warrant for the proposition that a complaint under section 499 in such a situation cannot be taken cognizance of unless two persons join in making it, i.e., it can only be considered if both the public servant and the person defamed join in making it, otherwise the person defamed is without any redress.
The statute has prescribed distinct procedure for the making of the complaints under these two provisions of the Indian Penal Code and when the prescribed procedure has been followed, the court is bound to take cognizance of the offence complained of The decided cases fully support this view and our attention has not been drawn to any case which has taken a contrary view as regards offences under section 500, Indian Penal Code.
In Satish Chandra Chakravarti vs Ram Dayal De (1), five judges of the Calcutta High Court considered this question and held that where the maker of a single statement is guilty of two distinct offences, one under section 21 1, Indian Penal Code, which is an offence against public justice, and the other an offence under section 499, wherein the personal element largely predominates, the offence under the latter section can be taken cognizance of without the sanction of the court concerned, as the Criminal Procedure Code has not provided for sanction of court for taking cognizance of that offence.
It was said that the two offences being fundamentally distinct in nature, could be separately taken cognizance of.
That they are distinct in character is patent from the fact that the former is made non compoundable, while the latter remains compoundable; in one for the the initiation of the proceedings the legislature requires the sanction of the court under section 195, (1) 845 Criminal Procedure Code, while in the other, Cognizance can be taken of the offence on the complaint of the person defamed.
It could not be denied that the accused could be tried of charges under sections 182 and 500, Indian Penal Code, separately on the same facts provided the public servant as well as the person defamed made complaints.
If that is so, there is no reason why one cannot be tried independently of the other so long as the requirements of each are satisfied.
Harries C. J. while delivering the Full Bench decision in question examined all the earlier cases of the Calcutta High Court and observed that where upon the facts the commission of several offences is disclosed some of which require sanction and others do not, it is open to the complainant to proceed in respect of those only which do not require sanction; because to hold otherwise would amount to legislating and adding very materially to the provisions of section is 195 to 199 of the Code of Criminal Procedure.
Sections 195 to 199 deal with the requisites for the prosecution of certain specified offences and the provisions of those sections must be limited to prosecutions for the offences actually indicated.
If it was the intention of the legislature to make sanctions or complaints in a certain form necessary for the prosecution of all offences disclosed by facts which would give rise to any of the offences specifically indicated in these sections, the legislature could have said so but it did not.
Recently this matter was canvassed before a Full Bench of the Madras High Court and it was held that in such cases it was open to the party defamed to take proceedings under section 499, Indian Penal Code, without the court filing a complaint in accordance with the provisions laid down in section 195.
There the question was whether the alleged defamer who had given false evidence in a court could be prosecuted under section 499, Indian Penal Code, without a complaint by the court before whom fie gave evidenice and the question was answered in the affirmative after an exhaustive review of the decided cases of the different High Courts in India.
It was said that if the offence of 846 giving false evidence in a judicial proceeding and defamation do not belong to the same genus but are distinct and separate in their characteryistics and ingredients, it was difficult to perceive any serious inhibition by the Criminal Procedure Code for initiation and trial of one of these offences independently of anterior resort to fulfillinig the conditions necessary to comnience a prosecution for the other.
These observations have apt application to the present case.
The ingredients of the offence under section 182 cannot be said to be the ingredients for the offence under section 500.
Nor can it be said that the offence relating to giving false information relates to the same group of offences as that of defamation.
Though, in our judgment, section 195 does not bar the trial of an accused person for a distinct offence disclosed by the same facts and which is not included within the ambit of that section, it has also to be borne in mind that the provisions of that section cannot be evaded by resorting to devices or camouflages.
The test whether there is evasion of the section or not is whether the facts disclose primarily and essentially an offence for which a complaint of the court or of the public servant is required.
In other words, the provisions of the section cannot be evaded by the device of charging a person with ail offence to which that section does not apply and then convicting him of an offence to which it does, upon the ground that such latter offence is a minor offence of the same character, or by describing the offence as being one punishable under some other section of the Indian penal Code,, though in truth and substance the offence falls in the category of sections mentioned in section 195, Criminal Procedure Code.
Merely by changing the garb or label of an offence which is essentially all offence covered by the provisions of section 195 prosecution for such an offence cannot be taken cognizance of by mis describing it or by putting a wrong label on it.
Before concluding, reference nay also be made to the decision of the Federal Court in Hori Ram Singh vs The Crown(1).
The appellant in that case was charged (1) 847 with offences under sections 409 and 477 A, Indian Penal Code.
The offence under section 477 A could not be taken cognizance of without the previous consent of the Governor under section 270(1) of the Constitution Act, while the consent of the Governor was not required for the institution of the proceedings under section 409, Indian Penal Code.
The charge was that the accused dishonestly misappropriated or converted to his own certain medicines entrusted to him in his official capacity as a sub assistant surgeon in the Punjab Provincial Subordinate Medical Service.
He was further charged that being a public servant, be wilfully and with intent to defraud omitted to record certain entries in a stock book of medicines belonging to the hospital where he was employed and in his possession.
The proceedings under section 477 A were quashed by the Federal Court for want of jurisdiction, the consent of the Governor not having been obtained, but the case was sent back to the sessions judge for hearing oil the merits as regards the charge under section 409, Indian Penal Code, and the order of acquittal passed by the sessions judge under that charge was set aside.
Two distinct offences having been committed in the same transaction, one an offence of misappropriation under section 409 and the other an offence under section 477 A which required the sanction of the Governor, the cir cumstance that cognizance could not be taken of the latter offence without such consent was not considered a bar to the trial of the appellant with respect to the offence under section 409.
Leave to appeal under article 134 (1) (c) of the Constitution was limited to the question of law referred to the Full Bench in this case, and it was distinctly said in the order disposing of the leave petition that leave would not have been granted had the scope of the appeal been limited to the merits of the case.
It was observed that having regard to the findings recorded by the final court of fact, as also the evidence in the case the elements of both the offences had been fully established.
The learned counsel for the appellants attempted to argue that on the facts found no 848 offence under section 297 could be said to have been made out.
This point, in our opinion, is not open at this stage, it having been hold that all the ingredients of the offence had been established on the record.
Even otherwise there is no substance in the contention because the prosecution evidence is sufficient to hold the offence proved against all the appellants.
For the reasons given above we hold that there is no substance in these appeals and they are accordingly dismissed.
Appeals dismissed.
Agent for the complainant: section C. Bannerjee.
| The accused lodged information at a police station that X had beaten and throttled his mother to death and when the funeral pyre was in flames he entered the cremation ground with the police.
The dead body was examined and the complaint was found to be false.
On the complaint of X, the accused was charged with offences under section 297, Indian Penal Code (trespass to wound religious feelings) and section 500 Indian Penal Code (defamation).
It was contended that, as the complaint disclosed offences under sections 182 and 211, Indian Penal Code, the Court could not take cognizance of the case except on a complaint by the proper authority under section 195, Criminal Procedure Code: Held, (i) that the facts which constituted the offence tinder section 297 were distinct from those which constituted an offence under section 182, as the act of trespass was alleged to have been committed after the making of the false report, so section 195 was no bar to the trial of the charge under section 297.
(ii)As regards the charge under section 500, where the allegations made in a false report disclose two distinct offences, one against a public servant and the other against a private individual, the latter is not debarred by the provisions of section 195, Criminal Procedure Code, from seeking redress for the offence committed against him.
Satish Chandra Chakravarti vs Ram Dayal De ; Hori Ram Singh vs The Crown [1939] F.C.R. 139 referred to.
Section 195 cannot however be evaded by the device of charg ing a person with an offence to which that section does not apply and then convicting him of an offence to which it does, on the ground that the latter offence is a minor one of the same character, or by describing the offence as one punishable under some other section of the Indian Penal Code, though in truth and substance the offence falls in the category of sections mentioned in section 195, Criminal Procedure Code.
|
iminal Appeal No. 92 of 1952.
Appeal under articles 132(1) and 134(1) (c) of the Constitution of India from the Judgment and Order dated the 29th August, 1952, of the High Court of Judicature At Madras (Rajamannar C.J. and Venkatarama Ayyar J.) in Criminal Appeal No. 129 of 1952 arising out of the order dated the 25th February, 1952, of the Court of the VII Presidency Magistrate, Egmore, Madras, in C. T. No. 1358 of the Calendar for 1950.
B. Somayya (C. B. Pattabhi Baman, with him) for theappellant.
V. K. T. Chari, Advocate General of Madras (V. V. Rahavan and Alladi Kuppuswami with him) for the respondent.
M. C. Setalvad, Attorney General for India (G. N. Joshi and P. A. Mehta, with him) for the Union of India.
B. K. P. Sinha for the State of Bihar.
section M. Sikri, Advocate General of Punjab (M. L, Sethi, with him) for the State of Punjab.
679 A. R. Somanatha Iyer, Advocate General of Mysore (R. Ganapathy lyer, with him) for the State of, Mysore.
K. B. Asthana for the State of Uttar Pradesh.
T. N. Subramanya Iyer, Advocate General of Travancore Cochin (M. B. Krishna Pillai and Balakrishna Iyer, with him) for the State of Travancore Cochin.
V. N. Sethi for the State of Madhya Pradesh.
Hajarnavis for Husain Kasam Dada (India) Ltd. (Intervener No. 8).
March 30.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal, which has come before us on a certificate granted by the Madras High Court under articles 134(1) (e) and 132(1) of the Constitution, is directed against an appellate judgment of a Division Bench of the High Court of Madras, passed in Criminal Appeal No. 129 of 1952, by which the learned Judges affirmed an order of the Seventh Presidency Magistrate, Madras, dated February 25, 1952, convicting the appellant of an offence punishable under section 15 of the Madras General Sales Tax Act and sentencing him to pay a fine of Rs. 1,000; in default to suffer imprisonment for a period of 3 months.
The appellant is a partner of a firm of merchants called Indo Malayan Trading Company" which has its head office in the city of Madras and carries on the business of selling and purchasing groundnut oil, sago and kirana articles.
For the period April 1, 1947, to December 31, 1947 the company was assessed to sales tax under the Madras Act IX of 1939 for an amount of Rs. 37,771 annas odd on a total turnover of Rs. 37,75,257 and for failure to pay the same were instituted against him under the provision of section 15 of the Act which resulted in his conviction as mentioned above.
The course of business, which is usually followed by the company 680 and which was actually followed during the period for which assessment is made, is as follows: The company receives orders in its Madras office from ' Calcutta merchants for supply of certain articles.
These articles are purchased in the local markets and they are despatched to Calcutta by rail or steamer.
The railway receipts and bills of lading are taken in the name of the vendor company and so also are the insurance policies, and they are sent to the company 's bankers in Calcutta who deliver the same to the consignees on payment of prices and other charges.
The sole point that requires consideration is, whether in these circumstances the sale transactions were liable to be taxed under the General Sales Tax Act of Madras? Before the High Court both the parties seem to have accepted the position that if on the facts stated above, which were not disputed by either side, the sales could be hold to have taken place within the Province of Madras, the tax could legitimately be levied on them but not otherwise.
The parties differed, however? as regards the test to.
be applied, in determining whether the sales did take place within the Province of Madras or not.
On behalf of the appellant the contention raised was that the place of sale in regard to all the transactions was Calcutta, as the property in the goods sold admittedly passed to the purchasers in that city.
The contention of the respondent State on the other hand was that the true test for determining the locality of the sale was not where the property in the goods sold passed, but where the actual transaction was put through.
As the company had its head office in the city of Madras, its accounts were maintained there and the goods were delivered to the common carrier in that city, the sale, according to the respondent, must be deemed to have taken place in Madras even though the property in the goods sold passed outside the province.
The High Court accepted this contention of the respondent State.
In the opinion of the learned 681 Judges, the word "sale" has both a legal and a popular meaning.
In the legal sense, it imports passing of property in the goods and it is in this sense that the word is used in the Sale of Goods Act. 'In the popular sense, however, it signifies the transaction itself which results in the passing of property.
As the object of the Legislature in the Sales Tax Act is to impose a tax on the occasion of the sale, it is immaterial that the sale has been completed outside the province.
The place where the property passes is, it is said, a matter of no concern to the taxing author ity and in such context the popular meaning of the word is more appropriate and should be adopted.
The further contention raised on behalf of the appellant, that if this view was accepted, the sales tax would have to be regarded as being extra territorial, in its operation and as such ultra vires the Provincial Legislature, was repelled by the High Court on the authority of the well known decision of the Judicial Committee in Wallace Brothers etc., & Company vs Commissioner of Income tax, Bombay(1).
It is the propriety of this decision that has been challenged before us and the contentions raised by Mr. Somayya, who appeared in support of the appeal, are of a two fold character : The learned counsel has argued in the first place that the Provincial Legislature functioning under the Government of India Act, 1935, was constitutionally incompetent to enact a legislation of this character which according to the interpretation put upon it by the High Court is capable of operating on sale transactions concluded outside the province.
The other contention is that on a proper construction of the relevant provisions of the Madras Sales Tax Act the High Court ought to have held that they do not authorise the imposition of sale tax in respect of a transaction of sale where property in the goods sold passes outside the province.
The first contention appears to us to be unsustainable.
Section 100 (3) of the Government of India (1) (1948] F.C.R.
I (P.C.).
, upon which Mr.
Somayya relied and which corresponds to article246(3) of the Constitution runs as follows : ``Subject to the two preceding sub sections, the Provincial Legislature has and the Federal Legislature has not, power to make laws for a province or any part thereof with respect to any of the matters enumerated in List II in the Second Schedule.
" The entry in the Provincial List that is relevant for our purpose is Entry No. 48 and that speaks of " taxes on the sale of goods and on advertisements.
" The entry does not suggest that a legislation imposing tax on sale of goods can be made only in respect of sales taking place within the boundaries of the province ; and all that section 100(3) provides is that a law could be passed by a Provincial Legislature for purposes of the province itself.
It admits of no dispute that a Provincial Legislature could not pass a taxation statute which would be binding on any other part of India outside the limits of the province, but it would be quite competent to enact a legislation imposing taxes on transactions concluded outside the province, provided that there was sufficient and a real territorial nexus between such transactions and the taxing province.
This principle, which is based upon the decision of the Judicial Committee in Wallace Brothers etc.
& Company vs Commissioner of Income tax, Bombay(1) has been held by this court to be applicable to sale tax legislation, in its recent decision in the Bombay Sales Tax Act case (2) and its propriety is beyond question.
As a matter of fact, the legislative practice in regard to sale tax laws adopted by the Provincial Legislatures prior to the coming into force of the Constitution has been to authorise imposition of taxes on sales and purchases which were related in some manner with the taxing province by reason of some of the ingredients of the transaction having taken place within the province or by (1) [1948] F.C.R. I (P.C.).
(2) The State of Bombay d Another vs United Motors (India) Ltd. & Others Civil Appeal NO. 204 Of 1952.
683 reason of the production or location of goods within it at the time when the transaction took place.
If in the Madras Sales Tax Act the basis adopted for taxation is the location of the place of business or of the goods sold, within the Province of Madras, undoubtedly it would be a valid piece of legislation to which no objection on constitutional grounds could be taken.
The controversy, therefore, narrows down to the short point as to what exactly has been adopted as the basis of the levy of sale tax by the Madras Legislature.
This leads us to the question of interpretation of the statute which is involved in the second point raised by Mr. Somayya.
It is a settled rule of construction that to ascertain the legislative intent, all the constituent parts of a statute are to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself.
The title of the Madras Sales Tax Act describes it to be an Act, the object of which is to provide for the levy of a general tax on the sale of goods in the Province of Madras and the very same words are repeated in the preamble which follows.
The title and preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intent and design of the Legislature and indicate the scope and purpose of the legislation itself.
The title and preamble of the Madras Sales Tax Act clearly show that its object is to impose taxes on sales that take place within the province, though these words do not necessarily mean that the property in the goods sold must pass within the province.
The expression "sale of goods " is a composite expression consisting of various ingredients or elements.
Thus, there are the elements of a bargain or contract of sale, the payment or promise of payment of price, the delivery of goods and the actual passing of title, and each one of them is essential to a transaction of sale though the sale is not completed or concluded unless the purchaser becomes the owner of the property.
The question is what element or elements have been accepted 684 by the Madras Legislature as constituting a sale in the province upon which it is the object of the statute to levy tax.
Section 2(h) gives the definition 'of "sale" and it is defined as meaning, every, transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge.
" Unmistakably the stress is laid in this definition on the element of transfer of property in a sale and no other.
The language gives no indication of the popular meaning of sale in which according to the High Court, the word was used.
It is to be noticed that there was no provision by way of explanation of this definition, in operation, at the material time to indicate in what cases a sale would be regarded as taking place within the Province of Madras, although the property in the goods sold did pass outside the boundaries of the province.
Such explanations were added by the Madras Act XXV of 1947 and one of these explanations, namely explanation 2, provides as follows : " Notwithstanding anything to the contrary in the Indian , the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made (a) if the goods were actually in this Province, at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made.
" It would be clear from this that these transactions were not considered by the Legislature to constitute sales within the Province of Madras under the definition itself, but by resort to a legal fiction they were 685 declared to be so, notwithstanding any provision in the to the contrary which it was assumed, would otherwise be applicable,.
The explanation further shows that in defining "sale" in section 2(h), the Legislature had in mind a sale in the Province of Madras and as these words occur in the title and preamble of the Act it was not deemed necessary to repeat them in the definition or the charging sections.
Section 3 is the charging section in the Act and it provides for the levy of a tax on the total turnover of a dealer for a particular year.
A "turnover" is defined to be the aggregate amount for which goods are either bought or sold.
The charging section purports to levy a tax on the sale of goods and the tax is on the sale of goods in the Province of Madras as defined in section 2(h) of the Act read in the light of its title and preamble.
In our opinion, the mere fact that the contract for sale was entered into within the Province of Madras does not make the transaction, which was completed admittedly within another province, where the property in the goods passed, a sale within the Province of Madras according to the provisions of the Madras Sales Tax Act and no tax could be levied upon such a transaction under the provisions of the Act.
A contract of sale becomes a sale under the only when the property in the goods is transferred to the buyer under the terms of the contract itself.
The presence of the goods within the province at the time of the contract would undoubtedly make the sale, if subsequently completed, a sale within the province by reason of the explanation added by Act XXV of 1947 ; but as this explanation was not in operation during the relevant period with which we are concerned, the assessment of sale tax, in our opinion, on the transactions during this period is illegal and not warranted by the provisions of the Act.
It is worthwhile to mention in this connection that except for the period in question no tax was attempted to be levied on similar transactions of the appellant by the taxing authorities in any of the 89 686 previous years,though the Act came into operation as early as the year 1939.
It is not disputed also that the company is paying sale tax on its transactions with the Calcutta merchants since the explanation added by Act XXV of 1947 came into force. 'In our opinion, the appeal should be allowed and the conviction and sentence passed by the courts below should be set aside.
The fine and sale tax, if actually paid, should be refunded to the appellant.
Appeal allowed.
Agent for the respondent (the State of Madras), the Union of India, and the States of Punjab, Mysore, Madhya Pradesh and Travancore Cochin (Interveners): G. H. Rajadhyaksha.
Agent for the State of Bihar: B. C. Prasad.
Agent for the State of U. P. C. P. Lal.
Agent for Intervener No. 8: Bajinder Narain.
| Under the Madras Sales Tax Act, 1939, as it stood before it was amended by the Madras Act XXV of 1947,the mere fact that the contract of sale was entered into within the Province of 88 678 Madras did not make a transaction which was completed in another province where the property in the goods passed, a sale within the Province of Madras and no tax could be legally levied upon such a transaction under the provisions of the Act.
Though a Provincial Legislature could not pass a taxation statute which would be binding on any other part of India it was quite competent for a province to enact a legislation imposing taxes on transactions concluded outside the province provided there was a sufficient and real territorial nexus between such transactions and the taxing province.
The title and preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intention and design of the Legislature and indicate the scope and purpose of the legislation itself.
It is a settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute are to be taken together and each word phrase or sentence is to be considered in the light of the general purpose and object of the statute.
Judgment of the Madras High court reversed.
|
iminal Appeal No.96 of 1952.
Appeal by special leave granted by the Supreme Court on the 14th February, 1952) from the Order dated the 17th September, 1951 of the High Court of Judicature at Bombay (Bavdekar and Chainani JJ.) in Criminal Appeal No. 1026 of 1951 arising out of Judgment and Order dated the 28th July, 1951, of the Court of the Third Additional Sessions Judge of Poona in Sessions Case No. 78 of 1951.
A. section B. Chari and J. B. Dadachanji for the appellant.
C. K. Daphtary, Solicitor General for India, (Porus A. Mehta, with him) for the respondent.
March 30.
The Judgment of the Court was delivered by MAHAJAN J.
The appellant on 28th July, 1951, was convicted on a charge under section 366, Indian Penal Code, for having kidnapped at Poona a minor girl Shilavati in order that she may be forced or seduced to illicit intercourse and was sentenced to undergo rigorous imprisonment for two years after a trial before the third additional Sessions Judge of that place sitting with a jury of live.
The jury returned a verdict of guilty by a majority of three to two.
The Sessions Judge came to the conclusion that the verdict was not perverse.
He therefore accepted it.
The appellant preferred an appeal to the High Court 811 but this was summarily dismissed.
This appeal is before us by special leave.
The prosecution case was that on the 12th December, 1949, the appellant who was a. music teacher went to the house of Shilavati and on the pretext that there was a girl waiting in his house and that he ' wanted to compare the voice of Shilavati with the voice of the girl took her to his house, and with the assistance of one Iqbal Putlabai (accused 2) kidnapped her.
Shilavati was traced in Bombay after four months in the house of one Babu Konde.
Thereafter she was medically examined and it was found that she was pregnant.
To prove the case against the appellant the prosecution examined in all sixteen witnesses.
Out of these four were eye witnesses, viz., Prahlad, Jamunabai, Namdeo and Shilavati.
Yamunabai, the mother of Shilavati, stated that on 12th December when she returned home in the evening she learnt from her sister in law Jamunabai and others that the appellant had taken Shilavati on the pretext that he wanted to compare her voice with that of one Prabha who was waiting in his house and thereafter Shilavati had not come back, that on getting this information she along with her brothers and sister in law went to the house of the appellant and questioned him as to why Shilavati was not sent back, whereupon the appellant replied that he had sent her by bus.
As Shilavati did not return home, she went to the police and lodged a complaint.
Ananda, uncle of the girl, deposed to the same effect.
Prahlad, brother of Shilavati, a boy of school going age, deposed that he saw Shilavati going with the appellant while he was playing outside the school.
Namdeo, who is a bricklayer, stated that on the 12th December while he was returning after completing his work at about 3 30 p. m. he saw Shilavati going with the appellant.
On medical examination it was found that Shilavati was a girl of 15 or 16 years of age and that 'she was pregnant.
Shilavati was examined as P, W, 10 and she deposed 105 812 that the accused came to her house at about 3 30 p.m. and told her that there was a singing party at Kirkee and that she should accompany him there, that she went with him on the promise that the appellant would send her back before her mother returned home, that while at the appellant 's house she was asked to smell certain scents and she felt giddy and could not speak and when she came to senses in the morning she found herself in Bombay in a hut at Sion.
She further said that on enquiry from one Kassam she was told that the appellant had left her there.
On the 12th December at about 11 40 p.m.
Yamunabai went to Padamji Gate police station and lodged a complaint there.
In the complaint it was stated that Shilavati had quarrelled with one Shantabai and had left the house and since then she had not returned.
The police were asked to find out her whereabouts.
On the 13th she sent a complaint to the Police Inspector, A Division, Poona.
Therein she made the allegation that the appellant used to come to her house for coaching Shilavati in harmonium, that she learnt that he had sent a chit to her daughter in her absence and had called her to his house and that on enquiries about Shilavati 's whereabouts he had given evasive answers.
The police head constable who was on duty on receipt of this complaint examined Yamunabai.
He read out the application to her and recorded her statement which reads thus: " My daughter Shilavati age about 13/14 has left my house at 4 p.m.
I made search for my daughter at the house of my paternal aunt, but I could not find her there.
M. H. Gyani (appellant) used to come to my house for coaching up my daughter in singing.
I do not know whether he has taken away my daughter nor have I seen him taking her away.
I have mentioned his name in my application through mistake.
My daughter has gone out of my house to some other place.
A search should therefore be made for her. .
I again state that my daughter left the house 813 after quarrelling with my mother Harnabai.
This is given in writing.
" In July, 1950, Yamunabai sent an application to the Collector of Poona.
In this application she said that she had appointed the appellant as a. music master for her daughter, that on Monday the 12th December, 1949, at about 6 p. m. the appellant and his friend Badsha had induced and kidnapped her to an unknown place.
She asserted therein that she was sure that nobody but both M. H. Gyani and Badsha had kidnapped her daughter.
In the witness box Yamuna Bai, as already stated, gave a different story and Shilavati herself did not fully support the version of her mother.
On the 14th March, 1950, a letter, Exhibit 4 G, was sent by Shilavati to her mother.
The relevant part of this letter is in these terms: " Since last so many days, I have left the house and I have not sent any letter to you and you must also be worrying as to where I have gone.
I am at Bombay and quite well too.
Do not worry about me, I had gone to the river at Bamburda, and there some one forced me and brought me to Bombay and he was prepared to marry with me.
He was an ordinary and old fellow.
J did not like it and he was going to convert me ' to Mahomedanism.
I felt very sorry for this and I was very much sad.
He beat me twice or thrice.
To whom shall I express my sorrow ? But there was a boy staying, there whom I told all the facts and told him to save me anyhow.
He promised to save me.
There were two days remaining for my marriage.
Till then, he arranged for my stay and also for dinner, and one day before the marriage, previous night he took me out from that place.
There were many police complaints against him, and he, at the cost of his life, saved me.
I married him in order to return his obligations.
Now I am very happy, I am not in need of anything now.
He is an ordinary boy.
He works in a press, and he is a worker.
He is from us and his name is Baburao Konde and next 814 time we will send a photograph of both of us.
Do not worry about me.
I am very happy.
Namaskar to all, elderly persons and ashirwadas to youngsters.
Namaskar to grandmother Harnabai.
Convey namaskars to Anand mama, Vithal mama, Ram mama, Shankar, Prahlad, Laxman, Hirabai, Jamnabai, Yamunabai, Jaibai, and to master.
" Shilavati is admittedly a talented Harijan girl who used to take part in dramatic peformances and used to give public peformances in music and dancing on some remuneration.
The letter written by her from Bombay speaks for itself and it was on receipt of this letter and further correspondence to which it is not necessary to refer that the police got clue of her where abouts and were able to restore her to her mother Yamunabai.
The statute law in India in certain circumstances permits an appeal against a jury 's verdict and authorizes the appellate court to substitute its own verdict on its own consideration of the evidence.
It has conferred on the appellate court extensive powers of overruling or modifying the verdict of a jury in the interests of due administration of justice confident that the appellate judges who have not themselves seen and heard the witnesses, will not exercise lightly the responsible power entrusted to them.
Section 423 in sub section (2), Criminal Procedure Code, states as follows: " Nothing herein contained shall authorize the court to alter or reverse the verdict of a jury unless it is of opinion that such verdict is erroneous owing to a misdirection by the judge or to a misunderstanding on the part of the jury of the law as laid down by him.
" Section 537 in sub clause (d) provides that no finding, sentence or order passed by a court of competent jurisdiction shall be reversed or altered on appeal on account of any misdirection in any charge to the jury 816 unless such error, omission, irregularity or misdirection has in fact occasioned a failure of justice.
Unless therefore it is established in a case that there has been a serious misdirection by the judge in charging.
the jury which has occasioned a failure of justice and has misled the jury in giving its verdict the verdict of the jury cannot be set aside.
The learned counsel for the appellant contended that the judge in his charge to the jury misdirected it in several important particulars and violated the rules of criminal jurisprudence and of evidence in a number of ways.
It was said that he failed to warn the jury that it would be unsafe for it to act on the statement of Shilavati without her statement being corroborated by other evidence,in material particulars.
The judge, according to the learned counsel, should have told the jury that though in law it was open to them if in the circumstances of this case they thought fit to do, to act on the uncorroborated testimony of Shilavati but that ordinarily it was not safe to do so without that statement being corroborated in material particulars.
This omission on the part.
of the judge, it was urged, amounted in law to a grave misdirection and the jury in all likelihood without such a warning arrived at its verdict on the basis of the uncorroborated evidence of the girl.
That part of the charge in which reference was made by the judge to Shilavati 's evidence wherein she had said that she was told by Kassam Khan that the appellant had left her there was criticized on the ground that the jury bad been directed to act on inadmissible evidence.
Then it was contendad that it was a serious misdirection to direct the jury that it had to solve the jigsaw puzzle that had arisen in the case by using their own ingenuity and by piecing together the various pieces of the puzzle.
The last misdirection relied upon concerned the following part of the charge: "After weighing the probabilities of the case, the evidence on record, as prudent men if you come to the conclusion that the story given by the prosecution does not appear to be probable and that the 816 accused must not have committed the offence, then in that case you have to return a verdict of not guilty.
" In our judgment, it is not necessary to pronounce on all the points urged by the learned counsel, because we are of the opinion that the judge clearly misdirected the jury when he asked it to solve the problem that had arisen by exercising its ingenuity and by resorting, if necessary, to speculative reasoning.
In other words, the judge gave the jury a carte blanche to, come to its conclusion on the basis of its own conjectures, if necessary.
Not only that.
He told the jury to hold the accused not guilty in case it found it improbable that he must not have committed the offence.
These propositions placed before the jury are repugnant to all notions of criminal jurisprudence and they must necessarily have affected its mind in arriving at the conclusion.
This is how the charge on this point reads: " So you will find, gentlemen, that there are as many as six versions before this court and therefore you have to consider all these versions and probabilities of the case, to find out whether the improved version now before the court is a correct one.
I would like also to bring to your notice the letter written at the instance of Shilavati from Bombay.
That letter is Exhibit 4 G. Shilavati in her examination before the court does not admit that this letter was written at her instance.
However, she has admitted before the police that this letter was written at her instance, and this was brought out in her cross examination.
In this letter she had stated that she had gone on that day to Bamburda river and there she was forcibly kidnapped by some man who was about to marry her.
That man was an old man and she did not approve that marriage.
Fortunately, this Konde came to her rescue and took her to Bombay and married her.
That is her statement.
Now, gentlemen, this is a jigsaw puzzle kept before you.
In jigsaw puzzles all the pieces are kept before us and we have to use our ingenuity and piece them together.
Some 817 links are missing in this case.
However, as rightly sub mitted by the learned Assistant Public Prosecutor, in such cases you have to weigh the probabilities of the case and therefore you have to find out from the material before us whether you can solve this jigsaw puzzle.
Now these points are before you that there was a quarrel with Shantabai.
The chit was alleged to have been sent by accused No. 1, and then the girl went to Bamburda river and there she was kidnapped by somebody.
Now, gentlemen, you have to consider whether it is or it is not possible that the girl Shilavati might have received soma chit probably from the accused No. 1.
This chit was seen by Shantabai who exposed to Harnabai the grandmother of the girl.
The witness Harnabai is an old woman and probably she was put out and ;he might have taken her to task, and she might have even gone to the length of stating that she should go out of the house.
Here is a young girl having hot blood, and it is or is it not probable that the girl in desperation had gone to Bamburda, and she mentions the river, and gentlemen, you can find that there is a confluence of the rivers Mula and Mutha; why did she go to the river ? Whether it is probable that she wanted to commit suicide.
You will find, gentlemen, that near that confluence there is a mosque and in the evidence it has come out that the girl was found at the hut at Sion with an old Mahommedan named Kassam Khan and his keep.
You have to consider whether it is probable that this Kassam Khan and his keep induced the girl to go with them to Bombay and whether Kassam Khan wanted to marry her there.
You have to find out whether it is probable that this chivalrous man Konde rescued her from the old man Kassam Khan who was about to marry her and got himself married to the girl.
The fact remains that the girl was found with Konde in Bombay ultimately.
It is in evidence of the girl herself that she found herself in a hut at Sion and Kassam Khan and his keep were keeping a watch over her. . . .
So, gentlemen, you Will have to find out all the probabilities of the case and 818 before us by the prosecution. " Had the charge to the jury stopped with the sentence, "So you will find, gentlemen, that there are as many as six versions before this court and therefore you have to consider all these versions and probabilities of the case, to find out whether the improved version now before the court is a correct one", no exception could possibly have been taken to it.
When the learned judge however, proceeded to direct the jury to piece together the various pieces of the jigsaw puzzle by use of their ingenuity he clearly misdirected them inasmuch as he told them that they could in ' solving the problem draw upon their own imagination and exercise their ingenuity in the matter without reference to the evidence that had been placed by the prosecution on the record.
Not only that, the learned judge himself indulged in speculation and placed a number of conjectures before the jury for its consideration.
The learned judge surmised that the girl might well have gone to the river for committing suicide and asked the jury to consider this surmise as well.
It was further surmised that a chit from the accused was received by Shilavati and that Shantabai saw that chit, and disclosed it to Harnabai, the grandmother, who in all likelihood took her to task and told her to get out of the house and thereupon the hot blooded Shilavati went to the river to commit suicide.
There is no evidence whatsoever on the record about the actual receipt of that chit, of Shantabai seeing it and exposing this fact to Harnabai and of Harnabai threatening Shilavati.
All these considerations mentioned to the jury were the results of the judge 's fertile imagination and were bound to mislead it into the belief that they could indulge in like conjectures and surmises in their effort to solve the puzzle.
The direction to the jury that it was to solve the jigsaw puzzle by use of its ingenuity does not find place in an isolated passage of the charge, but runs through it.
While winding up the learned judge again reiterated it and Said; 819 "As I have already told you, you have to piece together all the pieces of the jigsaw puzzle and try to., find out what story appears to you to be probable; whether the girl was drugged at all, or whether as stated by her in her letter she went to a river at Bamburda and there she met this Kassam Khan and his keep and along with them she went to Bombay of her own accord.
" In the concluding part of the charge the learned judge said: "After weighing the probabilities of the case, evidence on record, as prudent men if you come to the conclusion that the story given by the prosecution does not appear to be probable and that the accused must not have committed the offence, then in that case you have to return a verdict of not guilty.
" It is not possible say that these words were likely to give a correct lead to the jury in reaching its conclusion.
All that the jury should have been told was that after weighing the probabilities of the case and the evidence on the record, as prudent men they should answer "whether the prosecution had made out the charge against the accused.
" We are satisfied that as a result of These misdirections the jury in all likelihood gave a divided verdict of guilty by three to two not on evidence but on the basis of assumptions and conjectures.
In this situation, the question for consideration is what procedure should be followed by this court for undoing the mischief that has happened and which would be most conducive to the ends of justice.
The simplest course open to us is to order a retrial of the appellant.
It is also open to us to remit the case to the High Court with a direction that it should consider the merits of the case in the light of our decision and say whether there has been a failure of justice as a result of these misdirections.
Lastly it is open to us to examine the merits of the case and 106 820 decide for ourselves whether there has been a failure of justice in the case and an innocent man has been convicted.
It is now well settled that in deciding whether there has been in fact a failure of justice in consequence of a misdirection the court is entitled to take the whole case into consideration.
[Vide Abdul Rahim vs Emperor(1)].
The words "in fact" in section 637 (d), Criminal Procedure Code, emphasize the view that the court is entitled to go into the evidence itself in order to determine whether there has been a failure of justice.
In the peculiar circumstances of this case we have chosen to adopt the third course, because at this moment of time it is most conducive to the ends of justice.
It seems plain to us that on the material on this record no reasonable body of persons could possibly have arrived at the conclusion that the appellant kidnapped Shilavati as alleged by the prosecution.
We have taken upon ourselves the responsibility of deciding this case without the valuable opinion of the High Court because we feel satisfied that any other course would cause unnecessary harassment to the appellant.
With great respect we are, however constrained to observe that it was not right for the High Court to have dismissed the appeal preferred by the appellant to that court summarily, as it certainly raised some arguable points which required consideration though we have not thought it fit to deal with all of them.
In cases which prima facie raise no arguable issue that course is, of course, justified, but this court would appreciate it if in arguable cases the summary rejection order gives some indication of the views of the High Court on the points raised.
Without the opinion of the High Court on such points in special leave petitions under article 136 of the Constitution this Court sometimes feels embarrassed if it has to deal with those matters without the benefit of that opinion.
(1) A.I.R. 1946 P.C. 821 The, learned Solicitor General contended that this was not a fit case where the court was justified in going behind the verdict of the jury and in deciding the case in accordance with its own view of the evidence.
It was argued that the charge to the jury had to be taken as a whole, that though some slight exception might be taken to certain passages in the charge the learned judge had placed the case of both sides fairly before the jury and that not only did the learned judge place fairly the case of both sides before the jury, he indicated his opinion on the evidence strongly against the prosecution and that being so, the accused could not be allowed to say that the charge which was strongly in his favour and against the prosecution was defective in law.
It was said that it was open to the jury to accept the statement of the mother of the girl as well as the statement of the girl in spite of the different conflicting versions mentioned in the charge and that the jury having done so, the matter stood concluded.
As already observed, charge to the jury cannot be said to be a fair charge if it tells the jury to approach the decision of the matter from a wrong angle, and directs it to reach its decision by exercise of its own ingenuity and by having recourse to conjectures and speculative reasoning.
This convention of the learned Solicitor General therefore cannot be seriously considered.
That the verdict of the jury was erroneous in that it could not be the verdict of any body of reasonable men in the circumstances of this case is fully established by the facts and circumstances on the record.
What Yamunabai deposed in court has been set out in the earlier part of this judgment.
Her case now is that when she returned home on the 12th December, 1949, at about 6 30 p.m., she found that Shilavati was not in the house, she made enquiries from Jamna and Hira, she was told that accused 1 came and told them that there was a girl in his house and her voice was to be compared with Shilavati 's voice and took her 822 away on that pretext.
Prahlad, P.W. 4, deposed that when his mother returned home at 6 p.m. he told her that Shilavati had been seen by him in the company of accused 1.
Jamnabai, P.W. 5, stated that the accused came to the house at 3 p.m. and on the pretext that one girl had come to his house for singing he took Shilavati and that when Yamunabai returned she informed her of what had happened.
Ananda, P.W. 6, repeated the same story.
This story stands completely demolished by the different complaints that Yamunabai made to the police.
There is no satisfactory explanation whatsoever why when she made her first report to the police at 11 40 p.m. she did not tell the police that she had been told by her son, by Jamuna and by Namdev that the girl had been taken away by the appellant and that he had told them that she had been sent back in a bus.
Not only this, after she had sent a written complaint on the 13th December to the Police Inspector, Poona, suspecting the appellant of having kidnapped her daughter, she made a statement to the head constable, withdrawing that allegation in most unambiguous terms and stated that the girl had left the house after quarrelling with Harnabai.
In the first report to the police she had said that the girl had left after quarrelling with one Shantabai.
These statements made by her could not be said to be the result of mere figments of her brain.
She must have made them on some basis.
They give the lie direct to her present version.
When later on she sent an application to the Collector accusing the appellant and Badsha of having kidnapped her daughter she.
asserted that they had taken her away to an unknown.place at 6 p. m., though the occurrence in then earlier complaints was alleged to have taken place at about 3 30 p. m.
The letter of 14th March, 1960, written at the instance of Shilavati to Yamunabai falsifies all the versions given by her and clearly suggests that the girl left the house of her own accord.
In this letter she sent her regards to the appellant.
If he had kidnapped, her, that expression of respect would 823 not have found place in that letter at all Another version was mentioned in the evidence as to how the occurrence took place.
It was stated that the girl received a chit from the appellant and.
on the basis of this chit a quarrel ensued and the girl left the house.
On this state of the record it is quite evident that the version now given by Yamunabai to court or by Shilavati after she had come under the influence of her mother cannot be accepted.
It seems that the appellant because he was a music master and had been giving lessons to the girl a few months before her disappearance has been convicted on a charge under section 366, Indian Penal Code, ' not on the basis of evidence but on the basis of surmises and, conjectures.
The learned Solicitor General referred us to the statement of the bricklayer and of the boy Prahlad.
A mere reading of their statements shows that these are not true and have been procured to fill in gaps in the prosecution case.
Harnabai was not produced as a witness in the case and the learned judge in his charge to the jury was right when he observed that a number of links were missing in the prosecution case and they could only be filled in on the basis of conjectures.
Both Yamunabai and Prahlad studiously avoided stating that the girl took part in dramas or that she danced in public places.
They tried to make out that Shilavati was an unsophisticated girl having no knowledge of the world and that she never danced in public places or she never acted in public dramas.
There is ample material on the record consisting of her photos in the advertisements as well as in the statements made to the police which establishes that she acted in various dramas for which she was paid at the rate of Rs. 5 for each perfor mance and that she gave, dance performances and she was intending to make singing and dancing as her profession.
The very fact that the brother and the mother were at pains to create a false impression on the court by deposing falsely was itself sufficient to show that no reliance could be placed on their 824 testimony.
We are therefore firmly of the opinion that there has been a grave failure of justice in this *case and the appellant, an innocent man, has been convicted of a serious offence on a verdict of the jury arrived at in all likelihood on the basis of conjectures and that that verdict was the.
consequence of the misdirection given to the jury by the judge.
For the reasons given above we allow this appeal, set aside the verdict of the jury, and acquit the appellant of the offence with which he was charged.
Appeal allowed.
| In his charge to the jury the Judge told them that the case before them was a jig saw puzzle with some missing links and directed them to use their ingenuity to piece them together by finding out the probabilities and seeing whether they could successfully solve the puzzle.
Held, this was misdirection in that it invited the jury to exercise its ingenuity by having resort, if necessary, to speculative reasoning.
Where a jury has been misdirected and has based its verdict on assumptions and conjectures the Supreme Court may order a retrial or remit the case to the High Court with a direction that it should consider the merits of the case in the light of the decision of the Supreme Court and say whether there has been 810 failure of justice as a result of the mis direotions, or it may examine the merits of the case and decide for itself whether there has been a failure of justice in the case.
In deciding whether there has in fact been a failure of justice in consequence of a mis direction, the Court is entitled to take the whole case into consideration.
Abdul Rahman vs Emperor (A.I.R. referred to.
Though in cases which prima facie raise no arguable issue the High Court may dismiss an appeal summarily without giving any reasons, it is desirable that in arguable cases the High Court should in its summary rejection order give some indication of the views of the High Court on the points raised.
|
Appeal No. 181 of 1952.
Appeal by special leave granted by the Supreme Court on the 16th October, 1952, from the decision dated the 22nd December, 1952, of the Labour Appellate Tribunal of India at Calcutta in Appeals Nos.
366/51, Cal.
69/52 and Cal.
70/52, arising out of the award dated the 9th February, 1952, of the Chairman, Industrial Tribunal, Delhi.
M.C. Setalvad (Attorney General for India) and N.C. Chatterjee (B. L. Agarwal, with them) for the appellant.
A.S. B. Chari and Hardyal Hardy for the respondents.
April 10.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
This is an appeal by special leave from a decision dated September 22, 1952, of the Labour Appellate Tribunal of India at Calcutta setting aside an award dated February 9, 1952, made by the Industrial 'Tribunal :constituted to adjudicate on certain disputes between the appellant, the Punjab National Bank Ltd., Delhi (hereinafter referred to as the Bank) and its workmen, the respondents represented by their Union.
The facts leading to this appeal may be briefly stated.
Several other disputes between the parties had already been referred on February 21, 1950, to another Industrial Tribunal presided over by Sri K. section 688 Campbell Puri, and during the pendency of the proceedings before the said Tribunal, the Bank alleged that the respondents along with other workmen numbering more than a thousand illegally commenced a general strike on April 18,1951, in connection with a fresh dispute.
Thereupon, notice was issued to the strikers that unless they returned to work by April 24, 1951, they would be deemed to have left service of their own accord.
That notice having been ignored by the strikers a second notice was issued to them on April 27, 1951, terminating their service.
The Government of India thereupon intervened, and as a result of the discussions held between the Government officials and the Bank, the latter agreed to take back all the employees except 150 against whom the Bank had objections on account of their alleged subversive activities and other objectionable and unlawful conduct before and during the strike.
On July 2, 1951, the Government of India constituted a Tribunal to decide the questions regarding the dismissals etc.
of the aforesaid 150 employees, and that Tribunal, after calling for the statements of case on behalf of the parties and hearing them, made an award on February 9, 1951, refusing reinstatement on the sole ground that the respondents had gone on an illegal strike in contravention of section 23(b) of the , and that the Bank was entitled to dismiss them.
The Tribunal, however, granted to the respondents compensation byway of salary and allowances at half the rates from the date of dismissal to the date of the publication of the award.
The respondents appealed to the Labour Appellate Tribunal at Calcutta which, while agreeing with the Industrial Tribunal that the strike was illegal, held that it was condoned by the Bank and it was, therefore, not open to it to justify the dismissal of the respondents on the ground that they had participated in the illegal strike.
The Appellate Tribunal further held that the dismissal of the respondents ' was wrongful because no charges were framed against any of them in respect of their alleged acts of violence or 689 subversive activities and their explanation was not called for.
The Appellate Tribunal accordingly thought that further evidence was necessary on certain specific points mentioned in its, order and reserved its decision as to whether the respondents were entitled to reinstatement till after such evidence was taken.
Learned counsel for the Bank advanced a two fold contention in support of this appeal.
He challenged the correctness of the conclusion that the Bank had, in the circumstances of the case, condoned the illegal strike by the respondents, and maintained that it was open to the Bank to rely upon the illegal strike as justifying the dismissal of the respondents.
On that basis learned counsel argued that there could no longer be any question of reinstating the respondents in the service of the Bank as such reinstatement would in law amount to compelling the Bank to employ these respondents afresh in its service, which the Appellate Tribunal had no jurisdiction to do.
He accordingly submitted that this Court should set aside the order of the Labour Appellate Tribunal dated September 22, 1952, obviating the further enquiry directed by the said order.
We consider it unnecessary to express any opinion on the question of condonation or waiver of the illegal strike; for, assuming that there was no such condonation or waiver and it was open to the Bank to rely upon the illegal strike as a valid ground for dismissing the respondents, we are of opinion that section 33 of the , furnishes a short answer to the further contention that the Appellate Tribunal had no jurisdiction to order reinstatement of the respondents.
That section provides, inter alia, that no employer shall, during the pendency of any proceedings before a 'tribunal in respect of any industrial dispute, discharge by way of dismissal or otherwise, any workman concerned in the dispute save with the permission in writing of the said Tribunal.
Admittedly, no such permission was obtained.
If the pendency of the proceedings before 690 Sri Campbell Puri made the strike of the respondents illegal under section 23(b) of the Act, the dismissal of the respondents by the Bank without obtaining his permission as required by section 33 was also illegal.
We see no force in the argument of the AttorneyGeneral that the section has no application to the case as strikes and lock outs are dealt with in a different chapter, Chapter V, and as the respondents were not concerned in the disputes pending adjudication before Sri Campbell Puri.
The terms of section 33 are wide enough to cover the present case, and the fact that it finds place in Chapter VII headed "Miscellaneous" is by no means inconsistent with its general application to all cases of discharge on whatever ground it may be based.
This is shown by the recent amendment of the section by Act XLVIII of 1950 which has omitted the words "except for misconduct not connected with the dispute" in the newly substituted section.
It is equally clear that the respondents are concerned in the disputes pending before Sri Campbell Puri, as it is conceded that any award made by him would bind the respondents.
Section 33 being thus applicable to the case, the contention of the Bank that the dismissal of the respondents was lawful and that in consequence the Appellate Tribunal had no jurisdiction to direct their reinstatement falls to the ground.
We therefore see no reason to interfere with the order made by the Labour Appellate Tribunal and we accordingly dismiss the appeal with costs.
Appeal dismissed.
Agent for the appellant : Ganpat Rai.
| During the pendency of proceedings before an Industrial Tribunal relating to certain disputes between a bank and its workmen represented by the union of its employees, the respondents along with other workmen numbering over a thousand commenced a general strike in connection with a fresh dispute.
The strikers were dismissed and on a reference to another Tribunal, it was held by that Tribunal that the strike was illegal and the dismissal was legal.
The Labour Appellate Tribunal held on appeal that though the strike was illegal the bank had condoned it and the dismissal was therefore illegal and ordered reinstatement On further appeal; 687 Held, that even assuming that the strike was illegal and the bank had not condoned it, as proceedings were pending before another Tribunal between the bank and its workmen in respect of an industrial dispute, under section 33 of the , the bank could not dismiss the workmen save with the permission in writing of that Tribunal which was not obtained and the dismissal was accordingly illegal on this ground.
Section 33 of the , applies to strikes and lock outs as well, though it does not appear in Chap.
V of the Act which is headed " Strikes and lock outs " but in Chap.
VII which is headed " Miscellaneous."
|
67 of 1953.
Petition under article 32 of the Constitution of India for a writ in the nature of habeas corpus.
Veda Vyas (V. N. Sethi and section K. Kapur, with him) for the petitioner.
M. C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the respondents.
709 1953.
April 16.
The Judgment of the Court was delivered by PATANJALI SASTRI C.J.
This is a petition under article 32 of the Constitution for the issue of a writ in the nature of habeas corpus directing the release of the petitioner Dr. Ram Krishan Bhardwaj who is a medical practitioner in Delhi and is now said to be under unlawful detention.
The petitioner was arrested on the 10th March, 1953, under an order of the District Magistrate of Delhi made under section 3 of the Preventive Detention Act as amended.
The grounds of detention were communicated to the petitioner on the 15th March, 1953.
The first paragraph of that communi cation states that " the Jan Sangh, the Hindu Mahasabha and the Ram Rajya Parishad have started an unlawful campaign in sympathy with the Praja Parishad movement of Kashmir for defiance of the law, involving violence and threat to the maintenance of public order " as evidenced by the sub paragraphs which follow.
The incidents referred to in sub paragraphs (a) to (1) are said to have ranged from the 4th to the 10th March, 1953, the date on which the petitioner was arrested, but they do not directly implicate the petitioner.
They merely give particulars of the alleged unlawful activities of the three political organizations referred to above.
Subparagraph (m) is important, as, on it is founded the first contention of Mr. Veda Vyas, the learned counsel for the petitioner.
It runs as follows: "(m) On the evening of 11th March, 1953, there was very heavy brick batting indulged in by or at the instance of Jan Sangh and Mahasabha workers in Sabzimandi when the police dispersed a Jan Sangh and Hindu Mahasabha procession and several persons including policemen, journalists and other non officials were injured.
An assault was made on Miss Mridula Sarabhai and Sri Dan Dayal one of her associates received a stab injury.
" 710 It will be noticed that the incidents related in the sub paragraph are alleged to have taken place on the 11th March, the day after the petitioner was arrested and detained.
Mr. Veda Vyas relies upon it as showing that the District Magistrate did not apply his mind to the alleged necessity for the detention of the petitioner as, if he had done so, he could not possibly have referred to what happened on the 11th March as a ground of justification for what he did on the 10th The so called grounds on which the detention is said to have been based must, it was suggested, have been prepared by some clerk or subordinate in the District Magistrate 's office and mechanically signed by him.
The learned Attorney General explained that the incidents of the 11th March were referred to not as a ground for the arrest and detention of the petitioner, but merely as evidencing the unlawful activities of the movement organized by the Jan Sangh and the other political bodies of which the petitioner was an active member.
The explanation is hardly convincing and we cannot but regard this lapse in chronology as a mark of carelessness.
Notwithstanding repeated admonition by this Court that due care and attention must be bestowed upon matters involving the liberty of the individual, it is distressing to find that such matters are dealt with in a careless and casual manner.
In view, however, of the statements in the affidavit filed by the District Magistrate before us that he carefully perused and considered the reports.
and materials placed before him by responsible Intelligence Officers and that he was fully satisfied that the petitioner was assisting the movement and agitation started by the Jan Sangh, etc.
, we are not prepared to hold that the District Magistrate failed to apply his mind to the relevant considerations before he made the detention order as suggested for the petitioner.
The second contention raised by Mr. Veda Vyas is more formidable.
As already stated, the first paragraph of the statement.
of grounds, while it sets out the unlawful activities of the, three political bodies, 711 does not directly implicate the 'petitioner in any of them.
The second paragraph shows how the petitioner was concerned in those activities.
It begins by stating " The following facts show that you are personally helping and actively participating in the above mentioned movement which has resulted in violence and threat to maintenance of public order".
Then follow four sub paragraphs (a) to (d) which refer to private meetings of the Working Committee of the Jan Sangh in January and February, 1953, where, it is alleged, it was decided to launch and intensify the campaign and the petitioner made inflammatory speeches.
Sub paragraph (e) on which this contention is based runs thus : "(e) You have been organising the movement by enrolling volunteers among the refugees in your capacity as President of the Refugee Association of the Bara Hindu Rao," a local are& in Delhi.
It is argued by Mr. Veda Vyas that this ground is extremely vague and gives no particulars to enable the petitioner to make an adequate representation against the order of detention and thus infringes the constitutional safeguard provided in article 22 (5).
Learned counsel relies on the decision in Atma Ram Vaidya 's case(1) where this Court held by a majority that the person detained is entitled, in addition to the right to have the grounds of his detention communicated to him, to a further right to have particulars " as full and adequate as the circumstances permit " furnished to him so as to enable him to make a representation against the order of detention.
It was further held that the sufficiency of the particulars conveyed in the " second communication " is a justiciable issue, the test being whether it is sufficient to enable the detained person to make a representation " which, on being considered, may give relief to the detained person".
On this interpretation of article 22 (6) two questions arise for consideration : first, whether the ground mentioned in subparagraph (e) is so vague (i) 712 as to render it difficult, if not impossible, for the peti tioner to make an adequate representation to the appropriate authorities, and second, if it is vague, whether on vague ground among others, which are clear and definite, would infringe the constitutional safeguard provided in article 22(5).
On the first question, the Attorney General argued that the grounds must be read as a whole and so read, the ground mentioned in sub paragraph (e) could reasonably be taken to mean, that the petitioner was organizing the movement by enrolling volunteers from the 4th to 10th March in the area known as Bara Hindu Rao.
This interpretation is plausible, but the petitioner, who is a layman not experienced in the interpretation of documents, can hardly be expected without legal aid, which is denied to him, to interpret the ground in the sense explained by the AttorneyGeneral.
Surely, it is up to the detaining authority to make his meaning clear beyond doubt, without leaving the person detained to his own resource for interpreting the grounds.
We must, therefore, hold that the the ground mentioned in sub paragraph (e) of paragraph 2 is vague in the sense explained above.
On the second question, there is no considered pronouncement by this Court, though in some cases it would appear to have been assumed, in the absence of any argument, that one or two vague grounds could not affect the validity of the detention where there are other sufficiently clear and definite grounds to support the detention.
Mr. Veda Vyas now argues that even though the petitioner might succeed in rebutting the other grounds to the satisfaction of the Advisory Board, his representation might fail to carry conviction so far as the ground mentioned in sub paragraph (e) was concerned in the absence of particulars which he could rebut and the Advisory Board might, therefore, recommend the continuance of his detention.
The argument is not without force, as the possibility suggested cannot altogether be ruled out.
The Attorney General drew attention to the recent amendment of section 10 of the Preventive Detention 713 Act as a result of which the petitioner would be entitled to be heard in person before the Advisory Board if he so desires and, it was said that he would thus have the opportunity of getting the necessary particulars through the Board who could call upon the appropriate Government to furnish particulars if the Board thought that the demand for them was in the circumstances just and reasonable.
The petitioner would thus suffer no hardship or prejudice by reason of sufficient particulars not having been already furnished to him.
The question however is not whether the petitioner will in fact be prejudicially affected in the matter of securing his release by his representation, but whether his constitutional safeguard has been infringed.
Preventive detention is a serious invasion of personal liberty and such meagre safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Court.
In this case, the petitioner has the right, under article 22(5), as interpreted by this Court by a majority, to be furnished with particulars of the grounds of his detention "sufficient to enable him to make a representation which on being considered may give relief to him.
" We are of opinion that this constitutional requirement must be satisfied with respect to each of the grounds communicated to the person detained, subject of course to a claim of privilege under clause (6) of article 22.
That not having been done in regard to the ground mentioned in sub paragraph (e) of paragraph 2 of the statement of grounds, the petitioner 's detention cannot be held to be in accordance with the procedure established by law within the meaning of article 21.
The petitioner is therefore entitled to be released and we accordingly direct him to be set at liberty forthwith.
Petition allowed.
Agent for the petitioner : Ganpat Rai.
Agent for the respondent : G. H. Rajadhyaksha.
| Under article 21 (5) as interpreted by an earlier decision of this court a person detained under the Preventive Detention Act is entitled, in addition to the right to have the ground of his detention communicated to him, to a further right to have particulars as full and adequate as the circumstances permit furnished to him as to enable him to make a representation against the order of detention and the sufficiency of particulars conveyed in the second communication is a justiciable issue, the test being whether they are sufficient to enable the detained person to make a representation which on being considered may give him relief.
The constitutional requirement that the grounds must not be vague must be satisfied with respect to each of the grounds communicated to the person detained subject to the claim of privilege under el.
(6) of article 22 of the Constitution.
Where one of the grounds mentioned was "you have been organising the movement (Praja Parishad Movement) by enrolling volunteers among the refugees in your capacity as President of the Refugee Association of Bara Hindu Rao": Held, that this ground was vague and even though the other grounds were not vague the detention was not in accordance with the procedure established by law and was therefore illegal.
Dictum: Preventive detention is a serious invasion of personal liberty and such meagre safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Court.
|
l Appeals Nos. 176 and 176 A of 1952.
Appeals by Special Leave granted by the Supreme Court on the 20th February, 1952, and 23rd May, 1952, respectively, from the Judgment and Order dated the 6th December, 1951, of the High Court of Judicature in Assam at Gauhati in its Revenue Appellate Jurisdiction (Deka J.) in Revenue Appeal No. 65 (M) of 1951.
C. K. Daphtary, Solicitor General for India (Nuruddin Ahmed, with him) for the appellant in Civil Appeal No. 176.
B. B. Tawakley (K. B. Asthana, with him) for the respondent in Civil Appeal No. 176.
R. K. Chaudhury (Jai Gopal Ghosh and R. N. Tikku, with him) for respondent No. 2.
in Civil Appeal No. 176 and appellant in Civil Appeal No. 176 A. 1953.
April 14.
The Judgment of the Court was delivered by BOSE J.
This is a curious case in which the State Government of Assam having granted the first respondent a lease later cancelled its grant and regranted it to another party and now contends that it is not bound by the laws and regulations which ordinarily govern such transactions.
Assam is blest with fisheries which are under the control of and belong to the State Government.
Periodically the fishing rights are ]eased out to licensees and the State derives considerable revenue from this source.
So valuable are these rights that as long ago as 1886 it was considered undesirable to leave such a lucrative source of revenue, to the unfettered 867 discretion and control of either the Provincial Government or a single individual however eminent.
Accordingly, legislation was enacted and Regulation I of 1886 (The Assam Land and Revenue Regulation, 1886) was passed into law.
A Register of Fisheries had to be kept and the Deputy Commissioner was empowered, with the previous sanction of the Chief Commissioner (later Provincial Government), to declare any collection of water to be a fishery.
Once a fishery was so declared no person could acquire fishing rights in it except as provided by rules drawn up under section 155.
These rules, with alterations made from time to time, were still operative at all dates relevant and material to this case.
Put shortly, the effect of these rules at the dates mentioned here, was to require the fishing rights to be sold periodically by public auction in accordance with a particular procedure which was prescribed.
These sales were called " Settlements.
" Among the conditions of sale were the following : (1)The officer conducting the sale does not bind himself to accept the highest bid or any bid.
(2)The purchaser shall immediately after the acceptance of his bid furnish as security etc.
(3)The annual sale of fisheries in a district should be reported to the Commissioner for sanction in Form No. 100.
The Form shows that each individual settlement had to be sanctioned.
But the rules in force at the dates relevant to this case permitted a departure in these words: " Rule 190 A.
No fishery shall be settled otherwise than by sale as provided in the preceding instructions except with the previous sanction of the Provincial Government.
" There is also the following rule: " 191.
Fisheries should be settled to the best advantage but, subject to this condition, the agency of middlemen as lessees should be done away with as 868 far as possible.
To effect this the fishery area should be broken up into blocks of such size that the actual fishers may be able to take the lease, which should be given, for preference, to the riparian land occupants or to the actual fishermen.
The endeavour of the District Officer should be to do away with the middlemen by finding out who the sub lessees are and trying to come to terms with them.
" The Rules also made provision for an appeal to the Revenue Tribunal (the High Court acted as such) in the following words : "190.
All orders of a Deputy Commissioner or Sub Divisional Officer passed under these rules are appealable to the Revenue Tribunal.
" The first respondent held previous leases of the fishery with which we are concerned for a number of years.
The last of these was to expire on 31st March, 1951.
Shortly before its expiry there was agitation by way of petitions and memorials by some of the local fishermen asking in effect that rule 191 be given effect to though the applications do not actually mention the rule.
These applications, six in number, range in date from 27th October, 1950, to 13th March, 1951.
They were addressed to various officials ranging from the Chief Minister and the Revenue Minister to the Secretary to Government and the Parliamentary Secretary and the Deputy Commissioner.
Government therefore had all the facts fully before it.
In view of these applications Government decided to settle the fishery direct and wrote the following letter to the Deputy Commissioner on 1st February, 1951: Government desire to settle the above mentioned fishery direct under rule 190 A.
I am therefore directed to request you to put the fishery to auction and then to submit the bid list to Government with your recommendation for direct settlement.
" By that date Government had four of the six applications to which we have referred before it.
In addition, it had the recommendation of the Sub Deputy Collector 869 dated 4th January, 1951, in favour of these applications together with the Deputy Commissioner 's endorsement letter dated 5th January, 1951, confirming the facts set out in the Sub Deputy Collector 's endorsement and in the applications.
The first respondent also made ail application to the Parliamentary Secretary on 13th March, 1951, before any final decision was reached.
The Deputy Commissioner proceeded to auction the fishery on 24th February, 1951.
, and on 26th February, 1951, forwarded the bid lists to the Government with a recommendation in the first respondent 's favour (his was the highest bid) in the following terms : The present lessee is managing the fishery well and there is nothing against him." After this, and before the final sanction, Government received still another petition from some of the local fishermen asking for a settlement in their favour.
This was on 13th March, 1951.
Therefore, by that date Government had six petitions from the local fishermen before it and one by the first respondent as well as the various recommendations made by the District officials.
With all this material in its possession Government decided in favour of the first respondent and on 17th March, 1951, wrote to the Deputy Commissioner, with a copy to the Development Commissioner, as follows: " Government sanction settlement of the Chaiduar Brahmaputra and Kharoibeel fishery under rule 190 A with the existing lessee Shri Keshab Prosad Singh at an annual revenue of Rs. 17,700 for a term of three years with effect from the 1st April, 1951, on the usual terms and conditions.
" The Deputy Commissioner conveyed this sanction to the first respondent on 21st March, 1951, and called on him to make the necessary deposits.
The sanction is in the following terms: " You are hereby informed that Government have allowed settlement of Chaiduar Brahmaputra and Kharoibeel fishery with you at Rs. 17,700 per year 870 for 3 years with effect from 1st April, 1951.
You are therefore directed to deposit the 1 /4 purchase money amounting to Rs. 4,425 on 28th March, 1951, and the balance of Rs. 13,275 in cash on 31st March, 195 1, failing which the settlement granted is liable to be cancelled.
" According to all notions of contract current in civilised countries that would have constituted a binding engagement from which one of the parties to it could not resile at will, and had the first respondent tried to back out we have little doubt that the State Government of Assam would, and quite justifiably, have insisted on exacting its just dues.
But the State Government did not feel itself hampered by any such old fashioned notions regarding the sanctity of engagements.
On the very day on which it passed its orders in the first respondent 's favour, 17th March, 1951, it received two more petitions.
They emanated from the same sources as before and said nothing new; but they asked for a reconsideration of the orders just passed.
Had Government recalled its orders then and there, possibly no harm would have been done beyond exposing its vacillations to a limited official circle.
But it allowed five davs to pass and then the Revenue Secretary wired the Deputy Commissioner not to recall the orders of Government, but to "stay delivery of possession" pending what the Revenue Secretary was pleased to call "further orders of Government on the revision petitions".
But by then it was too late.
The acceptance of the bid had already been communicated to the first respondent and by all ordinary notions the contract was complete.
The State Government now says in effect, somewhat cynically, that it is not bound by the statutory rules and claims that that gives it the right to recall its previous orders and regrant the fishery to some other person or body more to its liking, or rather in whom it has discovered fresh virtueshidden from its view in its earlier anxious and mature deliberations.
Acting on the telegraphic instructions received by him, the Deputy Commissioner conveyed the orders to the first respondent on 22nd March, 1951, and said; 871 "The under mentioned document is forwarded to Srijut Keshab Prosad Singh for information and necessary action.
He is further informed that he is not to deposit the 1/4th purchase money and additional security. . till the decision of the revision petition mentioned in the telegram".
Three weeks elapsed and then on 13th April, 1951, the State Government solemnly "reviewed" its former order and said: "It is reported by the Deputy Commissioner that the Gamiri Kharai Chaiduar Fishermen Society, Ltd., is constituted by bona fide fishermen.
Accordingly, in view of the new circumstances brought forward by the above Society the review petition is allowed and the previous orders of Government dated the 17th March, 1951, is modified.
The Chaiduar Brahmaputra and Kharaibeel fishery is accordingly settled with the Camiri kharaiChaiduar Fishermen Society Ltd. " The manager of this Fishermen 's Society is one Maniram Das.
His name was put forward by 205 members who claimed to be bona fide Assamese fishermen in the petitions of 27th October, 1950, and 21st December, 1950, also by Manirani himself on behalf of this Society on 2nd January, 1951.
Their claims were endorsed by the Sub Deputy Collector on 4th January, 1951, and by the Deputy Commissioner on 5th January, 1951.
The same claims were again made by Manirani Das on behalf of the Society on 23rd January, 1951.
The " new circumstances " said to have been discovered on review was the following statement made by the Deputy Commissioner on 3rd April, 1951: " Gamiri Kharai Chaiduar Society is formed by bona fide fishermen" The previous statement of the Sub Deputy Collector made on 4th January, 1951, was: "The applicants are all Kaibarta people in the district of Darrang whose sole business is to deal with 872 fish. .
The applicants are Assamese people.
In view of this and in view of the fact that these people have been recommended by respectable persons, I suggest that Kharai Chaiduar fishery" (the one in question here) " may be settled with them to encourage them to compete with the, other fishermen coming from outside Assam.
" The Deputy Commissioner 's endorsement on this (the same Deputy Commissioner) dated 5th January, 1951, runs: " The petitioner (Maniram Das) is an actual fisherman as will appear from the report of the Sub Deputy Collector As observed by the Sub Deputy Collector. . it is a fact that the indigenous fishermen cannot compete with the upcountry people in open auction." To characterise the later statement of the Deputy Commissioner dated 3rd April, 1951, as disclosure of a new circumstance betrays a cynical disregard for accuracy on a par only with the Assam Government 's cynical disregard for its pledged word.
The Deputy Commissioner was informed of the Government 's revised decision on 13th April, 1951, and on 16th April, 1951, the fishery was settled with Maniram Das and, according to the first respondent, the settlement in his name was cancelled.
The first respondent 's reaction to this was to file an appeal to the High Court under rule 190 and at the same time to apply for a mandamus under article 226 of the Constitution.
The relief sought was worded as follows : " The humble appellant, therefore, prays that your Lordships would be pleased to set aside the settlement of the fishery with the respondent and restore the settlement of the same with the humble appellant.
" The High Court, not unsurprisingly on these facts.
granted the prayer.
It acted under rule 190 as an appellate tribunal and the only question for us to decide is whether it had jurisdiction to do so.
The 873 mandamus petition is not before us.
The appellant is the State of Assam.
There is an ancient presumption under section 114, illustration (h), of the Evidence Act, dating from at least 1872, that official acts have been regularly performed.
Strange as it may seem this applies to Governments as well as to lesser bodies and officials, and ancient though it is the rule is still in force.
True, the presumption will have to be applied with caution in this case but however difficult the task it is our duty to try and find a lawful origin for as many of the acts of the appellant 's Government as we can.
Now, as we have seen, prescribed fisheries in Assam were lifted out of the realm of matters which could be disposed of at the executive discretion of either Governments or officials and were placed under statutory regulation and control by sections 16 and 155 of the Assam Land.
and Revenue Regulation of 1886 and we have already referred to the elaborate set of rules which were drawn up in pursuance of that Regulation.
It follows that no fishery can be "settled" except in accordance with those Rules.
It was not disputed that, apart from rule 190 A which we are now called upon to construe, the Deputy Commissioner alone could effect a "settlement" and, as we have shown, he was bound.
to follow a prescribed procedure; also that his "settlement" was subject to the sanction of the Commissioner.
Rule 190 A permits a departure but we do not consider it necessary in this case to determine the exact extent of the departure permitted because the Deputy Commissioner was directed to put the fishery to auction and he did so.
The only departure from the rules was that instead of sending the result of the auction to the Commissioner for Settlement it was sent to the State Government direct.
In our opinion, that was a permissible departure but it was for all that a departure within the Rules.
In our judgment, the words " except with the previous sanction of the Provincial Government " are, 874 important.
We do not consider that this permits the Provincial Government when it so wishes to lift the sales completely out of the statutory protection afforded by the Regulation and proceed to dispose of them by executive action.
Such a construction would make rule 190 A run counter to section 16 of the Regulation which requires these sales to be made in accordance with rules framed under section 155, and of course a rule making authority cannot override the statute.
Accordingly, the law requires the sale to be under and in accordance with the rules.
It follows that the departure contemplated by rule 190 A is also a departure within the four corners of the rules read as a whole and is a part of the rules.
It is true the departure need not conform to the " preceding instructions " contained in the earlier portion of the rules but the departure once sanctioned itself becomes part and parcel of the rules.
This is important because one of the statutory safeguards against arbitrary executive action is the appeal to the Revenue Tribunal, which in this case is the High Court.
We would be slow to bold that this safeguard can be circumvented by the simple expedient of lifting a sale out of the rules whenever Government finds that convenient.
It seems to us that if the intention was to authorise Government to lift the matter out of the rules altogether and to proceed in an executive capacity the word " sanction " would be out of place, for Government would hardly require its own previous sanction to something which it is itself authorised to do.
The sanction must therefore refer to something which some other person or body is authorised to do, and in the context we feel that it can only mean sanction to the Deputy Commissioner to proceed in a manner which is not quite in accordance with the instructions con tained in the rules.
The next question is, to what extent was a departure sanctioned? This is to be found in the letter dated 1st February, 1951, addressed to the Deputy Commissioner : 875 Government desire to settle the above mentioned fishery direct under rule 190 A.
I am therefore directed to request you to put the fishery to auction and then to submit the bid list to Government with your recommendation for direct settlement ".
The State of Assam wishes to construe this to mean that the Government of Assam intended to flout the statute and disregard the Rules and proceed by executive action.
The words " direct settlement " do lend themselves to that construction but that would be an act which, in our opinion, would not be warranted by the law and, as we are bound to presume until the contrary is shown that the official acts of the Assam Government were regularly performed, we must, if we can, lean against a construction which would put that Government more in the wrong than we can help especially as it self purported to act under rule 190 A.
Now the only act which would be in consonance with rule 190 A and which would at the same time be in conformity with the letter of the first February would be for the Deputy Commissioner to sell by auction and then send the matter to Government direct for sanction instead of to the Commissioner.
That, in our opinion, would be a permissible departure and would make the action of Government legal and would bring the matter under rule 190 A.
In the cir cumstances, we are bound to construe this letter in that sense.
Now what did the Deputy Commissioner do ? So far as the actual auction was concerned, he followed the Rules.
He held a regular auction and recorded the bids in the usual way.
Up to that point he not only complied with the letter of the 1st February but also with the regular rules.
His only departure was to send his choice of a lessee to Government direct instead of to the Commissioner.
This, according to us, was a permissible departure.
Upon receipt of the Deputy Commissioner 's recommendation Government sanctioned the settlement with the first respondent and the Deputy Commissioner communicated the sanction.
876 It was argued on behalf of the State of Assam that this was not a settlement by the Deputy Commissioner but by the State Government and that the Deputy Commissioner was only acting as its mouthpiece when he conveyed the orders of Government to the first respondent.
our opinion, that is a mere playing with words.
The substance of the thing is there.
It would be illegal for Government to settle the fishery direct by executive action because of the statute.
It would be proper for it to sanction the settlement under rule 190 A in the way it did.
Government said it was acting under rule 190 A.
It said it had " sanctioned " the settlement.
Whose act was it sanctioning? Certainly not its own, for one cannot sanction one 's own act.
Sanction can only be accorded to the act of another and tile only other person concerned in this matter was the Deputy Commissioner.
Accordingly, in spite of the efforts of Government to appear as a bold brave despot which knows no laws but its own, we are constrained to hold that it not only clothed itself with an aura of legality but that it actually acted within the confines of the laws by which it is bound.
It follows that the settlement was the act of the Deputy Commissioner and fell within the four corners of the rules.
That vested the first respondent with a good and legal title to the lease.
Next followed a similar series of acts cancelling the settlement with the first respondent and resettling the fishery with the rival body.
As the Deputy Commissioner was the only authority competent to settle these fisheries, subject of course to sanction, we are bound to hold that the act of cancellation and the act of resettlement were his acts however much lie may have acted under the direction and orders of a third party.
That at once vested the High Court with jurisdiction to entertain the appeal against his actions under rule 190.
When we say the Deputy Commissioner acted under the direction and orders of the State Government, we refer to the actual act of "settling" and not to his choice of a lessee.
If this auction had proceeded in the normal 877 way, the Deputy Commissioner would have directed the auction and would have made a selection and would then have sent his selection on to a higher authority, the Commissioner, for sanction.
He would then have "settled" the fishery.
In the present case, he carried out every one of those steps except that the higher authority here was the State Government which had substituted itself under rule 190 A in place of the Commissioner.
It was the Deputy Commissioner who made the initial choice.
It was his choice which was " sanctioned " and it was he who in reality and in fact: " settled " the fishery with the first respondent.
The mere fact that the State Government in addition to " sanctioning " his act also told him to " settle " the fishery could not alter or divest limit of his legal authority.
This is not a case in which the Deputy Commissioner having been vested with a discretion failed to exercise it and acted as the mouthpiece of another.
His discretion was to select a bidder and he did that without any outside pressure.
There after his authority was to " settle " the fishery with the selected bidder once his act was sanctioned and the mere fact that lie was directed by another to do that which he would have been bound to do under the law in any event cannot divest the settlement of its legal and binding character.
On the merits the High Court was abundantly right.
We accordingly upheld its order and dismiss the appeal with costs payable to the first respondent.
Civil Appeal No. 176 A of 1952.
BOSE J.
For the reasons given in our judgment in Civil Appeal No. 176 of 1952 pronounced to day, we dismiss the appeal without costs.
Appeals dismissed.
Agent for the appellant in Appeal No. 176: Naunit Lal.
Agent for respondent No. 1 in Appeal No. 176 and respondent in Appeal No. 176 A: A. D. Mathur.
Agent for respondent No. 2 in Appeal No. 176 and appellant in Appeal No. 176 A: K. R. Krishnaswamy.
| The Government of Assam, desiring to settle a fishery direct under r. 190 A of the rules framed under the Assam Land and Revenue Regulation (1 of 1886), directed the Deputy Commis sioner concerned to put the fishery to auction and submit the bid list to Government with his recommendation for direct settlement.
The Deputy Commissioner accordingly auctioned the fishery and submitted the bid list with a recommendation in the first respondent 's favour.
Government sanctioned the settlement of the fishery with the first respondent and the latter was informed of the acceptance of the bid and directed to make the deposits.
Government received two more petitions on the same day for re consideration of the orders passed and three weeks later Government reviewed its order and settled the fishery with another person.
The first respondent preferred an appeal to the High Court under r. 190 which provided that all orders of a Deputy Commissioner passed under these rules were appealable to the High Court: Held, the words " except with the previous sanction of the Provincial Government " in r. 190 A do not permit the Provincial Government when it so wishes to lift the sales completely out of the statutory protection afforded by the Regulation and proceed to dispose of them by executive action.
Such a construction would make r. 190 A run counter to section 16 of the Regulation which requires these sales to be made under and in accordance with the Rules.
The departure contemplated by r. 190 A was a departure within the Rules.
As the Deputy Commissioner was the only 112 866 authority competent to settle these fisheries, subject to sanction, the act of cancellation and the act of resettlement were his acts, however much he may have acted under the direction and orders of the Government, and the High Court had jurisdiction to entertain the appeal under r. 190.
Judgment of the High Court of Assam affirmed.
|
Appeal No. 95 of 1952.
Appeal from the judgment and decree dated the 27th February, 1950, of the High Court of Judicature at Madras (Rao and Ayyar JJ.) in Appeal No. 635 of 1946 arising, out of judgment and decree dated the 13th August, 1946, of the Court of the Subordinate Judge of Tinnevelly in Original Suit No. 50 of 1945.
K. section Krishnaswamy Iyengar (section Ramachandra with him) for the appellants.
K. Rajah Iyer (R. Ganapathy Iyer, with him) for the respondent.
April 14.
The Judgment of the Court was delivered by MAHAJAN J.
One Lakshminarayana Iyer, a Hindu Brahmin, who owned considerable properties in the Tirunelveli district, died on 13th December, 1924, leaving him surviving a widow Ranganayaki, and a married daughter Ramalakshmi.
Ramalakshmi had married the plaintiff and had a number of children from him.
They were all alive in December, 1924, when Lakshminarayana died, Before his death he 850 executed a will on 16th November, 1924, the construction of which is in controversy in this appeal.
By this will he gave the following directions "After my lifetime, you, the aforesaid Ranganayaki Amminal, my wife, shall till your lifetime, enjoy the aforesaid entire properties, the outstandings due to me, the debts payable by me, and the chit amounts payable by me.
After your lifetime Ramalakshmi Ammal, our daughter and wife of Rama Ayyar Avergal of Melagaram village, and her heirs shall enjoy them with absolute rights and powers of alienation such as gift, exchange, and sale from son to grandson and so on for generations.
As regards the payment of maintenance to be made to Chinnanmal alias Lakshmi Ammal, wife of my late son Hariharamayyan, my wife Ranganayaki Ammal shall pay the same as she pleases, and obtain a release deed".
Ranganayaki entered into possession of the properties on the death of her husband.
On 21st February, 1928, she settled the maintenance claim of Lakshmi Ammal and obtained a deed of release from her by paying her a sum of Rs. 3,350 in cash and by executing in her favour an agreement stipulating to pay her a sum of Rs. 240 per annum.
Ramalakshmi died on 25th April, 1938 during the lifetime of the widow.
None of her children survived her.
On the 24th July, 1945, the widow describing herself as an absolute owner of the properties of her husband sold one of the items of the property to the 2nd defendant for Rs. 500.
On the 18th September, 1945, the suit out of which this appeal arises was instituted by the plaintiff, the husband and the sole heir of Ramalakshmi, for a declaration that the said sale would not be binding on him beyond the lifetime of the widow.
A prayer was made that the widow be restrained from alienating the other properties in her possession.
On the 19th September, 1945, an ad interim injunction was issued by the High Court restraining the widow from alienating the properties in her possession and forming part of her husband 's estate, In 851 spite of this injunction, on the 27th September, 1945, she executed two deeds of settlement in favour of the other defendants comprising a number of properties.
The plaintiff was allowed to amend his plaint and include therein a prayer for a declaration in respect of the invalidity of these alienations as well.
It was averred in the plaint that Ramalakshmi obtained a vested interest in the suit properties under the will of her father and plaintiff was thus entitled to maintain the suit.
The defendants pleaded that the plaintiff had no title to maintain the suit, that the widow was entitled under the will to an absolute estate or at least to an estate analogous to and not less than a widow 's estate, that the estate given to Ramalakshmi under the will was but a contingent one and she having predeceased the widow, no interest in the suit properties devolved on the plaintiff.
The main issue in the suit was whether the widow took under the will an absolute estate or an estate like the Hindu widow 's estate and whether the daughter 's interest therein was in the nature of a contingent remainder, or whether she got in the properties a vested interest.
The subordinate judge held that the widow took under the will a limited life, interest, and not an absolute estate or even a widow 's estate under Hindu law, and that the daughter got thereunder a vested interest in the properties to which the plaintiff succeeded on her death.
In view of this finding he granted the plaintiff a declaratory decree to the effect that the first defendant had only an estate for life in the suit properties and that the alienations made by her would not enure beyond her lifetime.
The question as to the validity of the alienations was left undetermined.
The unsuccessful defendants preferred an appeal against this decree to the High Court of Judicature at Madras.
During the pendency of the appeal the widow died on 14th February, 1948.
The High Court by its judgment under appeal affirmed the decision of the trial judge and maintained his view on the construction of the will.
Leave to appeal to the Supreme Court was 852 granted and the appeal was admitted on the 27th November, 1951.
The substantial question to decide in the appeal is whether the estate granted by the testator to his widow was a fall woman 's estate under Hindu law or merely a limited life estate in the English sense of that expression.
It was not contested before us that a Hindu can by will create a life estate, or successive life estates, or any other estate for a limited term, provided the donee or the persons taking under it are capable of taking under a deed or will.
The decision of the appeal thus turns upon the question whether the testator 's intention was to give to his widow ail ordinary life, estate or an estate analogous to that of a Hindu widow.
At one time it was a moot point whether a Hindu widow 's estate could be created by will, it being an estate created by law, but it is now settled that a Hindu can confer by means of a will oil his widow the same estate which she would get by inheritance.
The widow in such a case takes as a demisee and not as an heir.
The court 's primary duty in such cases is to ascertain from the language employed by the testator "what were his intentions", keeping in view the surrounding circumstances, his ordinary notions as a Hindu in respect to devolution of his property, his family relationships etc.; in other words, to ascertain his wishes by putting itself, so to say, in his armchair.
Considering the will in the light of these principles,it seems to us that Lakshminarayan Iyer intended by his will to direct that his entire properties should be enjoyed by his widow during her lifetime but her interest in these properties should come to an end on her death, that all these properties in their entirety should thereafter be enjoyed as absolute owners by his daughter and her heirs with powers of alienation, gift, exchange and sale from generation to generation.
He wished to make his daughter a fresh stock of descent so that her issue, male or female, may have the benefit of his property.
They were the real persons whom he earmarked with certainty as the ultimate recipients of 853 his bounty.
In express terms he conferred on his daughter powers of alienation byway of gift, exchange, sale, but in sharp contrast to this, on his widow he conferred no such powers.
The direction to her was that she should enjoy the entire properties including the outstandings etc.
and these shall thereafter pass to her daughters.
Though no restraint in express terms was put on her powers of alienation in case of necessity, even that limited power was not given to her in express terms.
If the testator had before his mind 's eye his daughter and her heirs as the ultimate beneficiaries of his bounty, that intention could only be achieved by giving to the widow a limited estate, because by conferring a full Hindu widow 's estate on her the daughter will, only have a mere spes successions under the Hindu law which may or may not mature and under the will her interest would Only be a contingent one in what was left indisposed of by the widow.
It is significant that the testator did not say in the will that the daughter will enjoy only the properties left indisposed of by the widow.
The extent of the grant, so far as the properties mentioned in the schedule are concerned, to the daughter and the widow is the same.
Just as the widow was directed to enjoy tile entire properties mentioned in the schedule during her lifetime in like manner the daughter and her heirs were also directed to enjoy the same properties with absolute rights from generation to generation.
They could not enjoy the same properties in the manner directed if the widow had a full Hindu widow 's estate and had the power for any purpose to dispose of them and did so.
If that was the intention, the testator would clearly have said that the daughter would only take the properties remaining after the death of the widow.
The widow cannot be held to have been given a full Hindu widow 's estate under the will unless it can be said that under its terms she was given the power of alienation for necessary purposes, whether in express terms or by necessary implication.
As above pointed out, admittedly power of alienation in express terms was not conferred on her.
It was argued 854 that such a power was implicit within the acts she was authorized to do, that is to say, when she was directed to pay the debts and settle the maintenance of Ramalakshmi it was implicit within these directions that for these purposes, if necessity arose, she could alienate the properties.
This suggestion in the surrounding circumstances attending the execution of this will cannot be sustained.
The properties disposed of by the will and mentioned in the schedule were considerable in extent and it seems that they fetched sufficient income to enable the widow to fulfil the obligations under the will.
Indeed we find that within four years of the death of the testator the widow was able to pay a lump sum of Rs. 3,350 in cash to the daughter in law without alienating any part of the immovable properties and presumably by this time she had discharged all the debts.
It is not shown that she alienated a single item of immovable property till the year 1945, a period of over 21 years after the death of her husband, excepting one, which she alienated in the year 1937 to raise a sum of Rs. 1,000 in order to buy some land.
By this transaction she substituted one property by another.
For the purpose of her maintenance, for payment of debts etc., and for settling the claim of the daughter in law she does not appear to have felt any necessity to make any alienation of any part of the estate mentioned in the schedule and the testator in all likelihood knew that she could fulfil these obligations without having recourse to alienations and hence he did not give her any power to do so.
In this situation the inference that the testator must have of necessity intended to confer on the widow power of alienation for those limited purposes cannot be raised.
In our opinion, even if that suggestion is accepted that for the limited purposes mentioned in the will the widow could alienate, this power would fall far short of the powers that a Hindu widow enjoys under Hindu law.
Under that law she has the power to alienate the estate for the benefit of the soul of the husband, for pilgrimage and for the benefit of the estate and for 855 other authorized purposes.
It cannot be said that a Hindu widow can only alienate her husband 's estate for payment of debts, to meet maintenance charges and for her own maintenance.
She represents the estate in all respects and enjoys very wide power except that she cannot alienate except for necessity and her necessities have to be judged on a variety of considerations.
We therefore hold that the estate conferred on Ranganayaki Ammal was more like the limited estate in the English sense of the term than like a full Hindu widow 's estate in spite of the directions above mentioned.
She had complete control over the income of the property during her lifetime but she had no power to deal with the corpus of the estate and it had to be kept intact for the enjoyment of the daughter.
Though the daughter was not entitled to immediate possession of the property it was indicated with certainty that she should get the entire estate at the proper time and she thus got an interest in it on the testator 's death.
She was given a present right of future enjoyment in the property.
According to Jarman (Jarman on Wills), the law leans in favour of vesting of estates and the property disposed of belongs to the object of the gift when the will takes effect and we think the daughter got under this will a vested interest in the testator 's properties on his death.
It was strenuously argued by Mr. K. section Krishnaswami Iyengar that Lakshminarayana Iyer was a Brahmin gentleman presumably versed in the sastras, living in a village in the southernmost part of the Madras State, that his idea of a restricted estate was more likely to be one analogous to a Hindu woman 's estate than a life estate a, , understood in English law wherein the estate is measured by use and not by duration, and that if this will was construed in the light of the notions of Lakshminarayana Iyer it should be held that the widow got under it a Hindu widow 's estate and the daughter got under it a contingent remainder in the nature of spes and on her death there was nothing which could devolve on the plaintiff and he thus had no locus standi to question the alienations made by the widow, 856 The learned counsel in support of his contention drew our attention to a number of decisions of different High Courts and contended that the words of this will should be construed in the manner as more or less similar words were construed by the courts in the wills dealt with in those decisions.
This rule of construction by analogy is a dangerous one to follow in construing wills differently worded and executed in different surroundings.
[Vide Sasiman vs Shib Narain (1)].
However, out of respect for learned counsel on both sides who adopted the same method of approach we proceed to examine some of the important cases referred to by them.
Mr. Krishnaswami Iyengar sought to derive the greatest support for his contention from the decision in Ram Bahadur vs Jager Nath Prasad (2 ).
The will there recited that if a daughter or son was born to the testator during his lifetime, such son or daughter would be the owner of all his properties but if there was no son or daughter, his niece section would get a bequest of a lakh of rupees, and the rest of the movable and immovable properties would remain in possession of his wife until her death, and after her these would remain in possession of his niece.
The remainder was disposed of in the following words: "If on the death of my wife and my niece there be living a son and a daughter born of the womb of my said brother 's daughter, then two thirds of the movable property will belong to the son and one third to the daughter.
But as regards the immovable property none shall have the lest right of alienation.
They will of course be entitled to enjoy the balance left after payment of rent".
This will was construed as conveying an absolute estate to the son and the daughter of the niece.
It was remarked that in spite of an.
express restriction against alienation, the estate taken by section (the niece) was an estate such as a woman ordinarily acquires by inheritance under the Hindu law which she holds in a completely representative character but is unable to (1) 491.
A. 2 5.
(2) 857 alienate except in case of legal necessity and that such a construction was in accordance with the ordinary notions that a Hindu has in regard to devolution of his property.
The provisions contained in this will bear no analogy to those we have to construe.
The restraint against alienation was repugnant to both a life estate and a widow ', , estate and was not, therefore, taken into account.
But there were other indications in that will showing that a widow 's estate had been given.
The fact that the gift over was a contin gent bequest was by itself taken as a sure indication that the preceding bequest was that of a widow 's estate.
There is no such indication in the will before us.
Reliance was next placed on the decision in Pavani Subbamma vs Ammala Rama Naidu (1).
Under the will there dealt with, the widow S, was to enjoy the properties and after her lifetime the properties were to be taken in the ratio of three to five by the son 's daughter and the daughter 's son respectively.
A suit was instituted by the son 's daughter for the recovery of possession of her share in one item of property forming, part of the estate which had been sold by section The question for decision in that case was whether section was at all entitled to sell anything more than her life interest even for purposes of meeting a necessity binding upon the estate.
Varadachari J. held that since in the will the gift over to the grand children was of the entire Properties, and not a mere gift by way of defeasance, it had to be held that it indicated that the prior gift in favour of the widow was only of a limited interest.
This decision therefore goes against the contention of the learned counsel but he placed reliance on the observations made in the judgment when the learned Judge proceeded to say " In deference to the view taken in Maharaja of Kolhapur vs sundaram Iyer (2), it may be possible to create an interest analogous to a woman 's estate in Hindu law notwithstanding the addition of a gift over and that the estate taken by section need not necessarily be only a life estate in the English law (1) (2) Mad.
1. 111 858 sense of the term.
" We do not understand how such passing observations can be helpful in deciding the present case.
Assuming that it is possible to create a Hindu woman 's estate not with standing the addition of a gift over, the question nevertheless whether that had been done in a given case must depend on the terms of the particular instrument under consideration.
The following remarks in the Privy Council decision in Nathu, Ram Mahajan vs Gangayabai(1) were next cited: As the will gave her the right to 'enjoy ' the income of the estate during her lifetime, it was evidently contemplated that she should, as provided by the Hindu law in the case of a widow, be in possession of the estate.
" Such casual observation made in respect of a will couched in entirely different terms cannot afford much assistance in the decision of the case.
In Vasantharao Ammannamma vs Venkata Kodanda Rao Pantalu(2), the next case cited, a Hindu testator who was a retired subordinate judge provided by his will as follows: "Out, of the aforestated ancestral lands, the oneninth share to which I am entitled shall be enjoyed after my death by my wife till her death, and after her death it shall pass to section son of my second elder brother deceased.
My self acquired properties shall on my death be enjoyed by my wife till her death and after her death they shall pass to my daughter.
Thereafter they shall pass to my grandson through my daughter".
The will was construed as giving the self acquired properties ultimately to the grandsons, and the estate of the daughter was likened to an estate which she would take under the law of inheritance, that is a limited estate analogous to a widow 's estate.
At page 193 of the report it was observed as follows : "The question therefore arises, did he intend to confer only a life estate or a daughter 's estate ? It seems (1) (2) , 859 to us that he meant to give a daughter 's estate rather than a life estate.
He omits the words 'during her life ' with reference to the disposition in favour of the daughter.
The words 'pass to my daughter ' would rather indicate that in the ordinary course of devolution the estate should pass to her, that is, the daughter and then to the grandsons.
The words used in favour of the grandsons seem to indicate that the estate conferred on the daughter was not a life estate because there is no direct gift in favour of the grandsons, but on the other hand, what he says is that through his daughter the estate shall pass to his grandsons.
Either he must have intended that the daughter should convey the property either by will or inter vivos to the grandsons or she having taken the estate, through her it should pass to the grandsons in the ordinary course of devolution.
If it was the daughter 's estate that was intended to be conferred, there can be no question that the estate taken by the grandsons is not a vested interest".
This line of reasoning which appealed to the learned judges is not of much he] ) to us here as the language hi this will is quite different.
If the same line of reasoning is adopted here, the decision of the case would go against the client of Mr. K. section K. Iyengar because in the will in this case the widow 's estate is delimited by the words " till your lifetime.
" Reliance was next placed on Maharaja of Kolhapur vs Sundaram Iyer (1).
That was a case of a government grant on the special terms set out therein and the question arose as to the nature of the grant.
There it was said that " the widows of Sivaji Raja got the gift of a life estate very much resembling the ordinary estate of a Hindu widow and with all the incidents of a widow 's estate except the liability to be divested, but nevertheless a life estate rather than an estate of inheritance." These remarks do not throw much light on the point before us.
The last decision referred to was the decision of the Privy Council in Mahomed Shumsool vs Shewukram(2) There a Hindu inhabitant of Bihar by a document of (1) Mad. 1.
(2) (1874 75) 2 I.A. 7. 860 a testamentary character declared his daughter who had two daughters, as his heir, and after her two daughters together with their children were declared heirs and malik.
One daughter of the daughter predeceased the testator without issue and the other daughter died after the death of the testator leaving an only son, the respondent in that case.
In a suit by the respondent against his grandmother the daughter of the 'testator for a declaratory order preserving unmolested his future right and title to the said lands, it was held that the daughter took an estate subject to her daughters succeeding her.
In this judgment the following observations were emphasized as relevant to this enquiry : " It has been contended that these latter expressions qualify the generality of the former expressions, and that the will, taken as a whole, must be construed as intimating the intention of the testator that Mst.
Rani Dhun Kaur should not take an absolute estate, but that she should be succeeded in her estate by her two daughters.
In other words, that she should take an estate very much like the ordinary estate of a Hindu widow.
In construing the will of a Hindu it is not improper to take into consideration what are known to be the ordinary notions and wishes of Hindus with respect to the devolution of property.
It may be assumed that a Hindu generally desires that an estate, especially an ancestral estate, shall be retained in his family; and it may be assumed that a Hindu knows that, as a general rule, at all events, women do not take absolute estates of inheritance which they are enabled to alienate.
" These observations are unexceptionable but it may also be pointed out that it is open to a Hindu to confer a limited life estate on his widow or even a larger estate than a widow takes as an heir and that in every case he may not confer upon her by will a Hindu widow 's estate which she would otherwise get by inheritance.
Generally speaking, there will be no point in making a will if what is to be given to a widow is what she would get on intestacy and cases do arise 861 where a Hindu wishes to give to his widow a more restricted estate than she would get on intestacy or a much larger estate than that.
The question in every case cannot be determined merely on the theory that every Hindu thinks only about a Hindu widow 's estate and no more.
What is given must be gathered from the language of the will in the light of the surrounding circumstances.
The learned counsel for the respondent followed the line adopted by Mr. Krishnaswami Iyengar.
He also on the analogy of other wills and the decisions given on their terms wanted a decision on the construction of this will in his favour.
In the first instance, he placed reliance on a decision of the Madras High Court in Ratna Chetty vs Narayana swami Chetty(1).
There the testator made a will in favour of his wife providing, inter alia, "all my properties shall after my death be in possession of my wife herself and she herself should be heir to everything and Mutha Arunachala Chetty (nephew) and my wife, should live together amicably as of one family.
If the two could not agree and live together amicably, my wife would pay Rs. 4,000 and separate him and then my wife would enjoy all the remaining properties with absolute rights.
If both of them would live together amicably, Muthu Arunachala Chetty himself would enjoy the properties which remain after the death of the widow.
" It was held upon the construction of the will that the nephew, who lived amicably with the widow till his death, had a vested interest at testator 's death which could not be defeated by a testamentary disposition by the widow in favour of a stranger.
This decision only decides that case and is not very relevant in this enquiry.
Reference was also made to the decision of their Lordships of the Privy Council in Mst.
Bhagwati Devi vs Chowdry Bholonath Thakur(2).
This was a case of a gift inter vivos.
The gift to Mst.
Chunderbutti, his wife, was in these terms (1) (19I4) (2) (1874 75) 2 I.A 256.
862 "the remaining 'milkiut ' and 'minhai ' 'estates, together with the amount of ready money, articles, slaves, and all household furniture I have placed in the possession of Mst.
Chunderbutti Thakurain, my wife, to be enjoyed during her lifetime, in order that she may hold possession of all the properties and milkiut possessed by me, the declarant, during her lifetime, and by the payment of Government revenue, appropriate the profits derived therefrom, but that she should not by any means transfer the milkiut estates and the slaves; that after the death of my aforesaid wife the milkiut and household furniture shall devolve on Girdhari Thakur, my karta (adopted son).
" The subordinate judge held that Chunderbutti got an estate for life with the power to appropriate profits and Girdhari got a vested remainder on her death.
The High Court took a different view and held that Chunderbutti took the estate in her character as a Hindu widow.
The Privy Council on this will held as follows " Their Lordships do not feel justified, upon mere conjecture of what might probably have been intended, in so interpreting it as materially to change the nature of the estate taken by Chunderbutti.
If she took the estate only of a Hindu widow, one consequence, no doubt, would be that she would be unable to alienate the profits, or that at all events, whatever she purchased out of them would be an increment to her husband 's estate, and the plaintiffs would be entitled to recover possession of all such property, real and personal.
But, on the other hand, she would have certain rights as a Hindu widow; for example, she would have the right under certain circumstances, if the estate were insufficient to defray the funeral expenses or her maintenance, to alienate it altogether.
She certainly would have the power of selling her own estate; and it would further follow that Girdhari would not be possessed in any sense of a vested remainder, but merely of a contingent one.
It would also follow that she would completely represent the estate, and under certain circumstances the statute 863 of limitations might run against the heirs to the estate, whoever they might be.
Their Lordships see no sufficient reason for importing into this document words which would carry with them all these consequences, and they agree with the subordinate judge in construing it according to its plain meaning.
" These observations have to a certain extent relevance to the present case but on the facts this case is also distinguishable.
This will was couched in different language than the will in the present case.
There was a clear prohibition, forbidding the widow to make any transfers of the milkiuit estates and the slaves.
Reference was also made to a decision of the Bombay High Court in Lallu vs Jagmohan(1).
The will there ran as follows: " When I die, my wife named Suraj ' is owner of that property.
And my wife has powers to do in the same way as I have absolute powers to do when I am present, and in case of my wife 's death, my daughter Mahalaxmi is owner of the said property after that.
" It was held that Suraj took only a life estate under the will, with remainder over to Mahalaxmi after her death and the bequest to Mahalaxmi was not contingent on her surviving Suraj, but that she took a vested remainder which upon her death passed to her heirs.
After considering the rival contentions of the parties, we are of the opinion that no sufficient grounds have been made out for disturbing the unanimous opinion of the two courts below on the construction of this will.
Both the learned counsel eventually conceded that the language used in the will was consistent with the testator 's intention of conferring a life estate in the English sense as well as with the intention of conferring a Hindu widow 's estate.
It was, however, urged by Mr. Rajah Iyer that as no express or implied power of alienation for purposes of all legal necessities was conferred on the widow, that circumstance (1) Bom.
409. 864 negatived the view that the testator intended to confer upon his widow a Hindu widow 's estate as she would get in case of intestacy.
He also emphasized that the words of the gift over to the daughter as supporting his construction which was further reinforced by the words of the will limiting the widow 's estate " till your lifetime " and of the omission from therein of words such as nialik etc., while describing the widow 's estate.
Mr. Krisbnaswami lyengar, on the other hand, contended that the absence of any words in the will restricting her powers of alienation and putting a restraint on them, suggested a contrary intention and that the daughter 's estate was described as coming into being after the estate of the widow and was not conferred on her simultaneously with the widow, and this connoted according to the notions of Hindus a full Hindu widow 's estate.
In our judgment, there is force in the contention of Mr. Rajah Iyer for reasons already stated and in the result, therefore, we dismiss this appeal with costs.
Appeal dismissed.
Agent for the respondent Ganpat Rai.
| A Hindu Brahmin governed by the Mitakshara law made a will in which he gave the following directions: " After my life time, you, the aforesaid Ranganayaki Ammal, my wife, shall till your lifetime enjoy the aforesaid entire properties .
After your lifetime, Ramalakshmi Ammal, our daughter and her heirs shall enjoy them with absolute rights and powers of alienation such as gift, exchange and sale from son to grandson and so on for generations.
As regards the payment of maintenance to be made to C, wife of my late son, H, my wife Ranganayaki Ammal shall pay the same as she pleases and obtain a release deed." After the death of the testator his wife entered into possession of his properties but before the death of his wife, his daughter and all her children died: Held, (i) that on a proper construction of the will in the light of surrounding circumstances, the testator bad conferred on his 849 wife only an ordinary life estate, and alienations made by her would not endure beyond her lifetime ; (ii) that the testator 's daughter obtained under the will a vested interest in the properties after the lifetime of the widow, to which her husband succeeded on her death.
The rule of construction by analogy is a dangerous one to follow in construing wills differently worded, and executed in different surroundings.
Ram Bahadur vs Joger Nath Prasad , Pavani Subbamma vs Arumala Rama Naidu ([1937] , Nathu Rain Mahajan vs Ganga Bai ([1938] , Vasanta Rao Ammennamma vs Venkata Kodanda Rao ([1940] , Maharaja of Kolhapur vs Sundaram Iyer (I.L.R. 48 Mad. 1), Mahoned Shumsool vs Shewakram (2 I.A. 7), Ratna Chetty vs Narayana swami Chetty , Mst.
Bhagwati Devi vs Choudry Bholonath Thakur (2 I.A. 256) and Lallu vs Jagmohan (I.L.R. referred to.
Judgment of the Madras High Court affirmed.
|
il Appeals Nos. 62 and 63 of 1953.
Appeals under Article 132 (1) of the Constitution of India from the Judgment and Order dated 22nd December, 1952, of the High Court of Judicature at Patna (Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous Judicial Cases Nos. 238 and 242 of 1952.
P. R. Das (J. C. Sinha and L. K. Chaudhry, with him) for the appellant in both the appeals.
M. C. Setalvad, Attorney General for India (L. N.Sinha and Bajrang Sahai, with him) for the respondents in both the appeals.
April 17.
The Judgment of the Court was delivered by section R. DAB J.
721 DAS J.
This judgment disposes of Civil Appeals No. 62 of 1953 and No. 63 of 1953 which have been heard together.
The Motipur Zamindari Company Ltd., the appellant in Civil Appeal No. 6.) of 1953, was incorporated in 1932 under the Indian Companies Act and has its registered office in Bengal.
It supplies sugar cane to a sister concern named Motipur Sugar Factory Ltd. Raja Jankinath Roy and Narendra Nath Roy and Co., Ltd., the appellant in C. A. No. 63 of 1953, was incorporated in 1933 under the Indian Companies Act and also has its registered office in Bengal.
This company owns Zamindari Properties in Purnea in the State of Bihar as well as in Malda in the State of West Bengal.
It carries on business, amongst others, as banker and financier.
On the 30th December, 1949, a bill entitled the Bihar Land Reforms Bill was passed by the Bihar Legislature and having been reserved for the consideration of the President received his assent on the 11th September, 1950.
The Act so passed and assented to was published in the Bihar Gazette on the 25th September, 1950, and was brought into force on the same day by a notification made by the State Government in exercise of powers conferred on it by section 1(3) of the Act.
Many of the proprietors and tenure holders of Zamindari estates took proceedings against the State of Bihar for appropriate orders restraining the State Government from taking over the estates under the provisions of the Act which they claimed to be beyond the legislative competency of the Bihar Legislature and otherwise void.
On the 12th March, 1951, a Special Bench of the Patna High Court held that the Act was unconstitutional on account of its contravention of article 14 of the Constitution.
The State of Bihar appealed to this Court.
Pending that appeal, the provisional Parliament passed the Constitution (First Amendment) Act, 1951.
The respondents in the main appeal took proceedings in this Court, contending that the Act amending the Constitution was invalid.
This 722 Court however, on 5th October, 1951, upheld the validity of the amending Act.
On 6th November, ' 1951, notifications were issued under section3 of the Bihar Act declaring that certain Touzies belonging to the appellants specified in the notification had passed to and become vested in the State.
Both the appellants made separate applications to the Patna High Court under article 226 of the Constitution praying for mandamus or suitable direction or order restraining the respondent from taking possession of their respective estates or tenures by virtue of the said notifications and for other ancillary reliefs.
The appeals filed by the State of Bihar against the order of the Special Bench declaring the Act to be void came up for hearing before this Court and this Court upheld the validity of the Act, except as to a few provisions mentioned in the majority judgment which were hold to be severable.
Thereafter, the two applications made by the two appellants under article 226 before the Patna High Court came up for hearing and were dismissed by a Bench of that Court on the 22nd December, 1952.
The present appeals have been filed with leave of the Patna High Court against the said dismissal.
The question raised before the High Court was whether the Act was, on its true construction, intended to apply to Zamindari estates of companies incorporated under the Indian Companies Act.
In support of the appellants ' contention that it was not, it was urged that the Bihar Legislature had no authority to legislate with respect to trading corporations or non trading corporations whose objects were not confined, to one State.
Reference was made to entries 43, 44 and 45 of List I to show that it was Parliament alone which was authorized to make law with respect to matters set forth in those entries.
The contention was that the Bihar Legislature in enacting the Act invaded the Union field and so the Act was invalid.
This argument was sought to be reinforced by reference to the provisions of the Act and the winding up provisions of the Companies Act.
The Patna High 723 Court overruled this contention and Mr.P.R.Das appearing in support of these appeals has not challenged this part of the decision of the Patna High Court.
The main point urged by Mr. P. R. Das is that even if the Bihar Legislature could make a law for acquiring Zamindari estates of incorporated companies it did not, by the Act, in fact do so.
Section 3 authorises the State Government to declare by notification that the estates or tenures of a proprietor or tenure holder have passed to and become vested in the State.
It will be recalled that it was under this section that the State Government on the 6th November, 1951, issued the notifications with respect to the estates of the appellants situate within the State.
Mr. P. R. Das 's principal contention is that the appellant companies do not come within the terms, " proprietor" or " tenure holder" as defined by the Act and consequently no part of their estates were intended 'to be vested or did in fact vest in the State.
" Proprietor" is defined by section 2(o) as meaning a person holding in trust or owning for his own benefit an estate or a part of an state and includes the heirs and successors in interest of a proprietor and, where a proprietor is a minor or of unsound mind or an idiot, his guardian, committee or other legal curator.
Tenure holder is defined by section 2 (r) as meaning a person who has acquired from a proprietor or from any tenure holder a right to hold land etc.
The argument is that the word "person" in the two definitions referred to above does not, in the context of the Act, include a company.
It is conceded that under section 4(40) of the Bihar General Clauses Act the word "person" would ordinarily include a company, but it is urged by Mr. P.R. Das that the definitions given in that section apply only where there is nothing repugnant in the subject or context.
His contention is that the definition of "proprietor" and "tenureholder" indicates that a company which owns Zamindaries is not covered by that definition.
We are unable to accept this contention.
It is not disputed 94 724 that a company can own an estate or a part of an estate and, indeed, the appellant companies are fighting these appeals only to protect the estates they own.
Therefore, they come within the first part of the definition.
The definition after stating what the word means proceeds to state what else the definition would include under certain specified circumstances, namely, the heirs and successor in interest etc.
The word "heir" certainly is inappropriate with regard to a company, but there is nothing inappropriate in the company having a successor in interest.
It is pointed out that there is no provision in the definition of proprietor to include the directors, managing agents and, in case of winding up, the liquidator of the company.
This circumstance does not appear to us to be a cogent reason for holding that the word "proprietor" as defined does not cover a company.
It is to be noted that the agent or, in case of insolvency, the official assignee or receiver of an individual proprietor are also not included in the definition.
Reference to proprietor who is a minor or of unsound mind or an idiot and his guardian etc.
, was obviously necessary because those proprietors suffer from legal disabilities.
Mr. P. R. Das refers us to various sections and rules framed under section 43 of the Act to show that ' only natural persons were intended to be affected by the Act, because, ha urges, the company is not competent to do the acts therein referred to.
It is not ,disputed by Mr. P. R. Das that there is no difficulty on the part of an incorporated company to do all these acts by its directors or managing agents or other officers empowered in that behalf by its articles of association, but his contention is that the provisions of the Indian Companies Act should not be imported into the consideration of the provisions of his Act.
He relies primarily on the case of Pharmaceutical Society vs The London and Provincial Supply Association, Limited(1) whore it was held,that a corporation (1) 725 did not come within the word "person" used in the Pharmacy Act, 1868 (31 & 32 Vic., Chapter 121).
Reliance was placed upon the observations of Lord Selborne L.C. at page 863.
The preamble to that Act recited, amongst other things, that it was "expedient for the safety of the public that persons keeping open shop for the retailing, dispensing or compound ing of poisons, and persons known as chemists and druggists should possess a competent practical knowledge of their business.
" This clearly comtemplated persons skilled in matters pharmaceutical and not impersonal corporate bodies which would know nothing about that particular business.
Indeed, Lord Blackburn in his speech in the House of Lords in the Pharmaceutical Society 's case(1) referred to this preamble and observed at page 870: "Stopping there, it is quite plain.
that those who used that language were not thinking of corporations.
A corporation may in one ' sense, for all substantial purposes of protecting the public, possess a competent knowledge of its business,, if it employs competent directors, managers, and so forth.
But it cannot possibly have a competent knowledge in itself.
The metaphysical entity, the legal 'person ', the corporation, cannot possibly have a competent knowledge.
Nor I think, can a corporation be supposed to be a 'person known as a chemist and druggist '.
" His Lordship then referred to the provisions of sections 1 and 15 of that Act and came to the conclusion that the word "person" in that Act.
meant a natural person.
The effect of 'that case is that whether the word "Person" in a statute can be treated as including a corporation must depend on a consideraiion of the object of the statute and of the enactments passed with a view to carry that object into effect.
In view of the object of that Act as recited in the preamble there could be no manner of doubt that the word "person" in that Act could not possibly, include a corporation.
Lord Selborne towards the end of page 863 indicated, by reference to the 18th (1) (188o) L.R. 5 App.
857 726 section, that the legislature by the word "person" referred only to individual persons as it was clearly repugnant to the subject of that Act to include a corporation within the word "person" as used in 'that Act.
Mr. P. R. Das urges that the judgment of Lord Selborne was founded on the fact that the corporation could not come within the term "person" on the ground that it could not make an application in writing signed by it.
From this Mr. P. R. Das urges that the necessary implication of this part of the judgment of Lord Selborne is that it was not permissible to take the provisions of the Companies Act into consideration for construing another Act.
If that were the implication of the speech of Lord Selborne, with respect, we are unable to accept the same.
Indeed, one cannot think of a company unless one has in view the provisions of the Companies Act, for a company is the creature of the Companies Act.
Its existence, powers and rights are all regulated by that Act.
The trend of the, speeches of the noble Lords in the case relied on by Mr. P. R. Das is that the object of the particular Act under consideration was entirely repugnant to the word "corporation" being included within the term "Person" as used in that Act, and as we apprehend it, that decision lays down nothing beyond that.
In support of his contention that a company owning an estate was never intended to be affected by the Act, Mr.P. R. Das draws our attention to the winding up sections of the Indian Companies Act and urges that it is not possible to fit in the scheme of winding up into the scheme of the Bihar Act.
If the Zamindari assets of the company are taken over and compensation is paid by non transferable bonds it will, he contends, be impossible, to apply the law of winding up in case the company goes into liquidation.
There will, according to him, be conflict of jurisdiction between the Court where the winding up is proceeding, which may conceivably be in another State, land the Bihar Government and its officers. 'We see no force in this contention.
Upon a 727 notification being issued under section 3, the Zamindari estate will vest in the State and the company will cease to have any interest in it.
Its only right will be to receive compensation.
In case of winding up the liquidator will have to pursue the remedy provided by this Act.
He or the company will be in no worse position than the official assignee or official receiver of an individual proprietor who may happen to become insolvent in another State.
Finally, Mr. P. R. Das strongly relies on section 41 of the Act and contends that that section would be wholly inapplicable to a company and that circumstance by itself would indicate that the Bihar Legislature did not intend that a company owning an estate should be governed by this Act.
A corporation, it is true, cannot be made liable for treason, felony or any misdemeanour involving personal violence or for any offence for which the only penalty is.
imprisonment or corporal punishment.
(Halsbury, 2nd Edition, Volume IX, article 5, p. 14).
Section 41 does not prescribe punishment by imprisonment only.
Mr. P. R. Das suggests that the infliction of imprisonment or fine would depend upon the gravity of the offence and not on the character of the offender.
This argument, however, would seem to run counter to the opinion of Lord Blackburn set forth at pages 869 870 of the report of the very case relied on by Mr. P. R. Das.
The recent cases of Director of Public Prosecutions vs Kent and Sussex Contractors Limited(1) and Rex vs I.C.B. Haulage, Limited and Another(2) seem to indicate that a corporation may be convicted even of an offence requiring an act of will or a state of mind.
Apart, however, from the consideration whether a company may be held guilty of wilful failure or neglect, as to which we need not express any definite opinion on this occasion, there can be no difficulty in applying the provisions of section 41 to the officers or agents of the company.
On a notification under section 3(1) being published the estate vests in the State.
Section 4 sets out the (1) [1944] I.K.B. 14 6.
(2) [1944] I.K.B. 551.
728 consequences of such vesting.
Clause (g) of that section empowers the Collector by written order served in the prescribed manner to require any person in possession of.
such an estate or tenure or any part thereof to give up possession of the same by a date specified in the order and to take such steps or use such force as may be necessary for securing compliance with the said order.
If any officer or agent of the company in the possession of the estate wilfully fails or ignores to comply with such lawful order, then surely he can be proceeded against under section 41.
Likewise, under section 40, the.
officers therein mentioned are authorized at any time before or after the date of vesting by a written order served in the prescribed manner to require a proprietor or tenureholder or any other person in possession of such an estate or tenure or any agents or employees of such proprietor, tenure holder or other person to produce at a time and place specified in the order such documents, papers or registers or to furnish such informa tion relating to such estate or tenure as such officer may from time to time require for any of the purposes of this Act.
A wilful failure or neglect to comply with such order would clearly bring the recalcitrant officer or agent of the company within the penalty provided under section 41.
Section 41 therefore, does not necessarily preclude the application of the Act to incorporated companies.
It cannot be denied that a company is competent to own and hold property.
The whole.
object of the impugned Act is thus stated by Mahajan J. in the State of Bihar vs Kameshwar Singh(1): " Now it is obvious that concentration of big blocks of land in the hands of a few individuals is contrary to the principle on which the Constitution of India is based.
The purpose of the acquisition contemplated by the impugned Act therefore is to do away with the concentration of big blocks of land and means of production in the hands of a few individuals and to so distribute the ownership and control of the (1) at p. 941.
729 material resources which come in the hands of the State as to subserve the common good as best as possible.
In other words, shortly put, the purpose behind the Act is to bring about a reform in the land distribution system of Bihar for the general benefit of the community as advised.
" In view of this, purpose there is no reason to differentiate between an individual proprietor and a company which owns estates or tenures.
Indeed, there is not only nothing repugnant in the subject or context of the Act which should prevent the inclusion of a company owning estate within the definition of "proprietor", such inclusion is necessary in order to give full effect to the very object of the Act.
In Appeal No. 63 of 1953 Mr. P. R. Das raises an additional point, namely, that the appellant company in that appeal owns estates which are situate in Purnea in the district of Bihar and in Malda in the district of West Bengal but it has to pay a single Government revenue at Purnea.
It is further alleged that the appellant company has let out portions of the estates on Patni leases, each of the Patnis comprising land situate both within and outside Bihar.
The acquisition of that part of the estate, which is situate in Bihar has made it difficult, if not impossible, for the appellant company to pay its revenue or recover its rent.
That part of the estate which is in Bihar cannot be severed from the rest and therefore the notification covering only the portion of the estate situate in Bihar is invalid.
We do not think there is any substance in this argument.
As stated by the High Court it is a simple case of apportionment of the revenue and also apportionment of the rent.
The necessity for such apportionment cannot possibly affect the validity of the notification.
For reasons stated above these appeals fail and must be dismissed with costs.
Appeals dismissed.
| The word " person " in the definitions of " proprietor "" and tenure holder " contained in a. 2 (o) and section 2 (r) respectively of the Bihar Land Reforms Act, 1950, includes companies incorporated under the Indian Companies Act, 1913.
There is nothing repugnant in the subject or context of the Act to prevent the inclusion of a company within the terms proprietor " and " tenure holder ".
On the contrary such inclusion is necessary in order to give full effect to the object of the Act.
Pharmaceutical Society vs The London and Provincial Supply Association, Limited distinguished.
|
iminal Appeal No. 81 of 1952.
Appeal by special leave from the Judgment and Order, dated 12th February, 1951, of the High Court of Judicature at Bombay in Criminal Application No. 644 of 1950.
Petitions Nos. 170, 171 and 172, being Petitions under article 32 of the Constitution, were also heard along with Appeal No. 81 of 1952.
Ishwarlal C. Dalal for the appellant.
M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the State of Bombay.
section M. Sikri, Advocate General of Punjab (Jindra Lal, with him) for the State of Punjab.
Jagjit Singh, Petitioner in Petition No. 170 of 1951, in person.
Other petitioners not represented.
April 17.
The Judgment of the Court was delivered by Bhagwati J.
95 732 BHAGWATI J.
This appeal by special leave from a judgment and order of the High Court of Judicature at Bombay raises an important question as to the construction of article 20(2) of the Constitution.
The appellant, a citizen of Bharat, arrived at the Santa Cruz airport from Jeddah on the 6th November, 1949.
On landing he did not declare that he had brought in gold with him but on search it was found that he had brought 107.2 tolas of gold in contravention of the notification of the Government of India dated the 25th August,1948.
The Customs Authorities thereupon took action under section 167, clause (8), of the Sea Customs Act VIII of 1878, and confiscated the gold by an order dated the 19th December, 1949.
The owner of the gold was however given the option to pay in lieu of such confiscation a fine of Rs. 12,000, which option was to be exercised within four months of the date of the order.
A copy of the order was sent on the 30th January, 1950, to the appellant.
Nobody came forward to redeem the gold.
On the 22nd March, 1950, a complaint was filed in the Court of the Chief Presidency Magistrate, Bombay, against the appellant charging him with having committed an offence under section 8 of the Foreign Exchange Regulation Act VII of 1947, read with the notification dated the 25th August, 1948.
The appellant thereupon on the 12th June, 1950, filed a petition in the High Court of Bombay under article 228 of the Constitution contending that his prosecution in the Court of the Chief Presidency Magistrate was in violation of the fundamental right guaranteed to him under article 20(2) of the Constitution and praying that as the case involved a substantial question of law as to the interpretation of the Constitution, the determination of which was necessary for the disposal of the case, the case may be withdrawn from the file of the Chief Presidency Magistrate to the High Court and the High Court may either dispose of the case themselves or determine the question of law and return it to the Chief Presidency Magistrate 's Court for disposal.
A rule was issued by the High Court on 733 the 26th June, 1950, which came on for hearing on the 9th August, 1950, before Bavdekar and Vyas JJ.
The rule was made absolute and the High Court directed that the proceedings pending against the appellant in the Court of the Chief Presidency Magistrate be withdrawn and brought before the High Court under article 228 of the Constitution.
The case was thereupon withdrawn and brought before the High Court and was heard by the High Court on the 17th October, 1950.
The learned Judges of the High Court, Chagla C.J. and Gajendragadkar J. were of the opinion that the appellant could claim the benefit of article 20(2) only if he was the owner of the gold which was confiscated and that before they decided as to whether there had been a prosecution and a punishment within the meaning of article 20(2) it was necessary that the Chief Presidency Magistrate should determine the question of fact as to whether the appellant was the owner of the gold which had been confiscated and in respect of which an option was given to him as stated above.
They therefore sent the matter back to the Chief Presidency Magistrate directing him to find a; to whether the appellant was or was not the owner of the gold stating that they would deal with the application after the finding was returned.
The Chief Presidency Magistrate recorded evidence and on the 20th January, 1950, recorded the finding that the appellant was the owner of the gold in question and returned the finding to the High Court.
Chagla C.J. and Gajendra gadkar J. heard the petition further on the 12th February, 1951.
They reversed the finding of the Chief Presidency Magistrate, dismissed the application of the appellant and directed that the case should go back to the Chief Presidency Magistrate for disposal according to law.
The appellant obtained on the 1st November, 1951, special leave to appeal against the judgment and order passed by the High Court.
The question that arises for our determination in this appeal is whether by reason of the proceedings 734 taken by the sea Customs Authorities the appellant could be said to have been prosecuted and punished for the same offence with which he was charged in the Court of the Chief Presidency Magistrate, Bombay.
There is no doubt that the act which constitutes art offence under the Sea Customs Act as also an offence under the Foreign Exchange Regulation Act was one and the same, viz., importing the gold in con travention of the notification of the Government of ,India dated the 25th August, 1948.
The appellant could be proceeded against under section 167(8) of the Sea Customs Act as also under section 23 of the Foreign Exchange Regulation Act in respect of the said act.
Proceedings were in fact taken under section 167(8) of the Sea Customs Act which resulted in the confiscation of the gold.
Further proceedings were taken under section 23 of the Foreign Exchange Regulation Act by way of filing the complaint aforesaid in the Court of the Chief Presidency Magistrate ' Bombay, and the plea which was taken by the accused in bar of the prosecution in the Court of the Chief Presidency Magistrate, was that he had already been prosecuted and punished for the same offence and by virtue of the provisions of article 20(2) of the Constitution he could not be prosecuted and punished, again.
The word offence has not been defined in the Constitution.
But article 367 provides that the (Act X of 1897), shall apply for, the interpretation of the Constitution.
Section 3(37) of the defines an offence to mean any act or omission made punishable by any law for the time being in force and there is no doubt that both under the provisions of section 167 (8) of the Sea Customs Act and section 23 of the Foreign Exchange Regulation Act the act of the appellant was made punishable and constituted an offence.
In order however to attract the operation of article 20(2) the appellant must have been prosecuted and punished for the same offence when proceedings were taken by the Sea Customs Authorities.
The 735 High Court did not go into the question as to whether the appellant was prosecuted when proceedings were taken before the Sea Customs Authorities.
It considered the question of punishment in the first instance and thought it necessary to arrive at a ' finding as to the ownership of the confiscated gold before it could consider the application of the appellant.
In the opinion of the High Court the appellant could be said to have been punished only if it were established that he was the owner of the confiscated gold.
If he was the owner, the confiscation was a punishment, which would not be so if he was not the owner of the gold.
This question of the ownership of the gold was not in our opinion material.
The gold was found in the possession of the appellant when he landed at the Santa Cruz airport.
The appellant was detained and searched by the Customs Authorities and the gold was seized from his person.
Proceedings under section 167(8) were taken by the Customs Authorities and after examining witnesses an order was passed on the 19th December, 1949, confiscating the gold and giving an option to the owner to pay a fine of Rs. 12,000 in lieu of such confiscation under section 183 of the Sea Customs Act.
Copy of this order was forwarded to the appellant and for all practical purposes the appellant was treated as the owner of the confiscated gold.
As a matter of fact when evidence was recorded before the Chief Presidency Magistrate on remand the Assistant Collector of Customs gave evidence that no one else had claimed the gold and had the appellant paid the penalty and obtained the Reserve Bank permit and produced the detention slip he would have been given the gold.
Once the appellant was found in possession of the confiscated gold the burden of proving that be was not the owner would fall upon whosoever affirmed that he was not the owner.
The complaint which was filed in the Court of the Chief Presidency Magistrate, Bombay, also proceeded on the footing that the appellant committed an offence in so far as he brought the gold without the permit from 736 the Reserve Bank of India, that no permit was ever applied for or granted to the appellant and that the appellant had been given an opportunity of showing whether he had obtained such permit but that he failed to produce the same.
It appears therefore that the question of the ownership could not assume as much importance is the High Court attached to it.
If the Court came to the conclusion that the appellant was prosecuted when proceedings were taken by the Sea Customs Authorities there was not much scope left for the argument that he was not punished by the confiscation of the gold and the option given to him to pay a fine of Rs. 12,000 in lieu of such confiscation.
To be deprived of the right of possession of valuable goods may well be regarded in certain circumstances as by itself a punishment.
We have therefore got to determine whether under the circumstances the appellant can be said to have been prosecuted when proceedings were taken by the Sea Customs Authorities.
The fundamental right which is guaranteed in article 20(2) enunciates the principle of "autrefois convict" or "double jeopardy".
The roots of that principle are to be found in the well established rule of the common law of England "that where a person has been convicted of an offence by a court of competent jurisdiction the conviction is a bar to all further criminal proceedings for the same offence." (Per Charles J. in Beg.
vs Miles (1).
To the same effect is the ancient maxim "Nemo bis debet punire pro uno delicto", that is to say that no one ought to be twice punished for one offence or as it is sometimes written "pro eadem causa", that is, for the same cause.
This is the principle on which the party pursued has available to him the plea of autrefois convict" or " autrefois acquit".
" The plea of 'autrefois convict ' or 'autrefois acquit ' avers that the defendant has been previously convicted or acquitted on a charge for the same offence as that in respect of which he is arraigned.
The question for the jury (1) 737 on the issue is whether the defendant has previously been in jeopardy in respect of the charge on which he is arraigned, for the rule of law is that a person must not be put in peril twice for the same offence.
The test is whether the former offence and the offence now charged have the same ingredients in the sense that the facts constituting the one are sufficient to justify a conviction of the other, not that the facts relied on by the Crown are the same in the two trials.
A plea of 'autrefois acquit 'is not proved unless it is shown that the verdict of acquittal of the previous charge necessarily involves an acquittal of the latter." (Vide Halsbury 's Laws of England, Hailsham Edition, Vol. 9, pages 152 and 153, paragraph 212).
This principle found recognition in section 26 of the , "where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments but shall not be liable to be punished twice for the same offence," and also in section 403 (1) of the Criminal Procedure Code, 1898, " A person who has been tried by a court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under section 236, or for which he might have been convicted under section 237.
" The Fifth Amendment of the American Constitution enunciated this principle in the manner following: ". . . nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled, in any criminal case, to be witness against himself. . . . 738 Willis in his Constitutional Law, at page 528, observes that the phrase "jeopardy of life or limb" indicates bat the immunity is restricted to crimes of the highest grade, and this is the way Black stone states the rule : " Yet, by a gradual process of liberal construction the courts have extended the scope of the clause to make it applicable to all indictable offences, including misdemeanours.". . " Under the United States rule, to be put in jeopardy there must be a valid indictment or information duty presented to a court of competent jurisdiction, there must be an arraignment and plea, and a lawful jury must be impanelled and sworn.
It is not necessary to have a verdict.
The protection is not against a second punishment but against the peril in which he is placed by the jeopardy mentioned.
" These were the materials which formed the background of the guarantee of fundamental right given in article 20(2).
It incorporated within its scope the plea of "autrefois convict" as known to the British jurisprudence or the plea of double jeopardy as known to the American Constitution but circumscribed it by providing that there should be not only a prosecution but also a punishment in the first instance in order to operate as a bar to a second prosecution and punishment for the same offence.
The 'words "before a court of law or judicial tribunal" are not to be found in article 90(2).
But if regard be had to the whole background indicated above it is clear that in order that the protection of article 20(2) be invoked by a citizen there must have been a prosecution and punishment in respect of the same offence before a court of law or a tribunal,required by law to decide the matters in con troversy judicially on evidence on oath which it must be authorised by law to administer and not before a tribunal which entertains a departmental or ail administrative enquiry even though set up by a statute but not required to proceed on legal evidence given on oath.
The very wording of article 20 and the words used therein:" convicted commission of 739 the act charged as an offence", "be subjected to a penalty ", " commission of the offence ", " prosecuted and punished ", " accused of any offence ", would indicate, that the proceedings therein contemplated are of the nature of criminal proceedings before a court of law or a judicial tribunal and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure.
The tests of a judicial tribunal were laid down by this Court in Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi(1) in the following passage quoted with approval by Mahajan and Mukherjea JJ.
from Cooper vs Wilson '(2) at page 340: "A true judicial decision presupposes an existing dispute between two or more parties and then involves four requisites : (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) If the dispute between them is a question of fact, the ascertaiment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) If the dispute between them is a question of law, the submission of legal argument by the parties; and (4) A decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law.
" The question whether the Sea Customs Authorities when they entertained proceedings for confiscation of the gold in question acted as a judicial tribunal has got to be determined in accordance with the above tests.
The , 'was enacted to consolidate and amend the law relating to the levy of sea customs duties.
The hierarchy of the officials are the (1) ; , (2) 96 740 Customs Collector, who is the officer of Customs for the time being in separate charge of a custom house, the Chief Customs Officer who is the Chief Executive Officer of the Sea Customs for a port and the Chief Customs Authority which is the Central Board of Revenue.
Sections 18 and 19 enact prohibitions.
and restrictions on importation and exportation of goods and section 19(a) provides for detention and confiscation of goods whose importation is prohibited.
After making various provisions for the levy of sea customs duties, Chapter XVI enacts offences and penalties and several offences mentioned in the first column of the schedule to section 167 are made punishable with penalties mentioned in the third column thereof.
Item 8 relates to the offence committed by the importation of goods contrary to the prohibition or restriction imposed in that behalf under sections 18 and 19 of the Act and penalty prescribed for such an offence is: " Such goods shall be liable to confiscation ; any person concerned in any such offence shall be liable to a penalty not exceeding three.
times the value of the goods, or not exceeding one thousand rupees.
" Chapter XVII prescribes the procedure relating to offences, appeals, etc.
Powers of search are given to the officers of customs but provision is made that a person about to be searched can, require the officer to take him previous to search before the nearest Magistrate or Customs Collector.
Search warrant can only be issued by the Magistrate and can be executed in the same way and has the same effect as a search warrant issued under a law relating to criminal procedure.
Powers are also given to the officers of Customs to arrest persons reasonably suspected of having committed an offence under the Act but the person arrested is to be forthwith taken before the nearest Magistrate or Customs Collector.
The Magistrate is entitled either to commit such person to jail or order him to be kept in custody of the police for such time as is necessary to enable the Magistrate to communicate with the proper officers of Customs.
No 741 such power is given to the Customs Collector.
Section 181(A) also provides for the detention of packages containing certain publications imported into the States.
Section 182 provides that except in the case of certain offences therein mentioned which involve proceedings before a Magistrate confiscation, increased rate of duty or penalty can be adjudged by the Customs Authorities therein mentioned and section 183 provides for option to be given to the owner of the goods confiscated to pay in lieu of confiscation such fine as the officer thinks fit, Section 186 provides that the award of any confiscation, penalty or increased rate of duty under the Act by an officer of Customs is not to prevent the infliction of any punishment to which the person affected thereby is liable under any other law.
An appeal is provided under section 188 from a decision or order of the officer of Customs to the Chief Customs Authority who is thereupon to make such further enquiry and pass such order as he thinks fit confirming, altering or annulling the decision or order appealed against.
Section 191 provides for a revision by the Central Government on the application of a person aggrieved by any decision or order passed by an officer of Customs or the Chief Customs Authority from which no appeal lies.
Section 193 provides for the enforcement of the payment of penalty or increased rate of duty as adjudged against any person by an officer of Customs.
If such officer is not able to realise the unpaid amount from other goods in charge he can notify in writing to any Magistrate within the local limits of whose jurisdiction such person may be, his name and residence and the amount of penalty or increased rate of duty unrecovered and such Magistrate is thereupon to proceed to enforce payment of the said amount in like manner as if such penalty or increased rate had been a fine inflicted by himself.
It is clear on a perusal of the above provisions that the powers of search, arrest and detention are given to the Customs Authorities for the levy of sea customs duties and provision is made at the same time for a 742 reference to the Magistrate in all cases where search warrants are needed and detention of the arrested person is required.
Certain offences of a serious nature are to be tried only by Magistrates who are the only authorities who can inflict punishments by way of imprisonment.
Even though the customs officers are invested with the power of adjudging confiscation, increased rates of duty or penalty the highest penalty which can be inflicted is Rs. 1,000.
Confiscation is no about one of the penalties which the Customs Authorities can impose but that is more in the nature of proceedings in rem than proceedings in personam, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law and in respect of the confiscation also an option is given to the owner of the goods to pay in lieu of confiscation such fine as the officer thinks fit.
All this is for the enforcement of the levy of and safeguarding the recovery of the customs duties.
There is no procedure prescribed to be followed by the Customs Officer in the matter of such ad judication and the proceedings before the Customs Officers are not assimilated in any manner whatever to proceedings in courts of law according to the provisions of the Civil or the Criminal procedure Code.
The Customs Officers are not required to act judicially on legal evidence tendered on oath and they are not authorised to administer oath to any witness.
The appeals, if any, lie before the Chief Customs Authority which is the Central Board of Revenue and the power of revision is given to the Central Government which certainly is not a judicial authority.
In the matter of the enforcement of the payment of penalty or increased rate of duty also the Customs Officer can only proceed against other goods of the party in the possession of the Customs Authorities.
But if such penalty orincreased rate of duty cannot be realised therefrom the only thing which he, can do is to notify the matter to the appropriate Magistrate who is the only person empowered to enforce payment as if such penalty or 743 increased rate of duty had been a fine inflicted by himself.
The process of recovery can be issued only by the Magistrate and not by the Customs Authority.
All these provisions go to show that far from being authorities bound by any rules of evidence or procedure established by law and invested with power to enforce their own judgments or orders the Sea Customs Authorities are merely constituted administrative machinery for the purpose of adjudging confiscation, increased rates of duty and penalty prescribed in the Act.
The same view of the functions and powers of Sea Customs Officers was expressed in& decision of the Bombay High Court to which our attention was called.
(See Mahadev Ganesh Jamsandekar vs The Secretary of State for India in Council(1).
We are of the opinion that the Sea Customs Authorities are not a judicial tribunal and the adjudging of confiscation, increased rate of duty or penalty under the provisions of the do not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting a plea of double jeopardy.
It therefore follows that when the Customs Authorities confiscated the gold in question neither the proceedings taken before the Sea Customs Authorities constituted a prosecution of the appellant nor did the order of confiscation constitute a punishment inflicted by a court or judicial tribunal on the appellant.
The appellant could not be said by reason of these proceedings before the Sea Customs Authorities to have been "Prosecuted and punished" for the same offence with which he was charged before the Chief Presidency Magistrate, Bombay, in the complaint which was filed against him under section 23 of the Foreign Exchange Regulation Act.
The result therefore is that the appeal fails and must be dismissed.
Petitions Nos. 170, 171 and 172 of 1961.
(1) (1922) L.L.R. 46 Bom.
By an order of this Court dated the 26th November, 1952 these petitions were ordered to be heard by the Constitution Beach along with Criminal Appeal No. 81 of 1952, as the same point as regards "autrefois convict" or "double jeopardy" was also ' involved therein.
Jagjit Singh, Vidya Rattan and Parma Nand, the three petitioners in the respective petitions were detenus under the , detained in the Central Jail, Ferozepur, and governed by the Punjab Communist Detenus Rules, 1950, framed by the Government of Punjab under section 4(a) of the Act.
On the 6th February, 1950, it is alleged, a general assault on jail officials was made by the detenus including Jagjit Singh.
An alarm was rung and the warder guard after some time overpowered the detenus who were responsible for the assault.
Thirteen jail officials and twelve detenus sustained injuries and the detenus were all removed to cells.
On the 7th February, 1950, the three detenus petitioners resorted to a hunger strike which continued upto the 10th April, 1950.
They were separately confined from and after the 6th February, 1950.
Their letters and interviews were stopped for two months with effect from the 7th February, 1950, and papers and books were stopped with effect from the 8th February, 1950, for the duration of the hunger strike.
The hunger strike continued and they continued to be separately confined till the 10th April, 1960.
It appears that more than 7 1/2 months after the hunger strike the Jail Superintendent, Shri K. K. Matta, filed a complaint against Jagjit Singh in the Court of Shri P. L. Sondhi, M.T.C.,Ferozepur, under rule 41(2) of the Punjab Communist Detenus Rules charging him with having committed a jail offence in resorting to hunger strike.
He also filed a complaint before the same Magistrate against Jagjit Singh for having committed offences under sections 332 and 353 and sections 147 and 149 of the Indian Penal Code.
He further filed against Vidya Rattan and Parma Nand complaints under rule 41 (2) of the Punjab Communist Detenus Rules for having committed 745 a jail offence in resorting to hunger strike.
On the 16th February, 1951, the three detenu petitioners,, filed before this Court petitions under article 32 of the Constitution asking for the issue of a writ of prohibition not to proceed with the prosecutions of the petitioners in the said cases on the ground that they had been prosecuted and punished for the same offence already by the Jail Superintendent and therefore they could not be prosecuted and punished for the same offence once again and that the prosecutions which were launched against them in the, Court of Shri P. L. Sondhi, M.I.C., Ferozepur, could not lie as being in contravention of the fundamental right guaranteed under article 20(2) of the Constitution.
Jagjit Singh argued his own petition in person.
Vidya Rattan had intimated to this Court that he would be satisfied with the decision on Jagjit Singh 's petition and wanted his absence to be excused.
Parma Nand did not appear at the hearing even though notice of the hearing was served upon him.
It was urged by Jagjit Singh that the proceedings which were adopted by the Jail Superintendent against the petitioners amounted to their prosecution and punishment for the same offence and that therefore the prosecution which was now launched against them was not competent as it exposed them to double jeopardy and violated the fundamental right guaranteed to them under article 20(2).
It was on the other hand urged by the Advocate General of Punjab that the Jail Superintendent merely took disciplinary action against the petitioners and the punishment if any which was meted out to them was for breaches of discipline within the meaning of section 4(a) of the Act and the Punjab Communist Detenus Rules, 1950, framed thereunder, that there was no prosecution and punishment of the petitioners within the meaning of article 20(2) and that therefore the petitions were liable to be dismissed.
Section 4 of the (Act No. IV of 1960), provides for power to regulate place and conditions of detention, 746 "Every person in respect of whom a detention order has been made shall be liable (a) to be detained in such place and under such conditions, including conditions as to maintenance, discipline and punishment for breaches of discipline, as the appropriate Government may, by general or special order, specify The Punjab Communist Detenus Rules, 1950, were framed by the Government of Punjab in exercise of the powers conferred by section 4 (a) of the Act.
Rules 39, 40 and 41 provide for offences and punishments.
Rule 39 lays down certain rules of discipline and rule 40 provides that any detenu who contravenes any of the provisions of rule 39 or refuses to obey any order issued thereunder, or does any of the acts mentioned in the following portion of the rule 40, viz. : (i) assaults, insults, threatens or obstructs any fellow prisoner, any officer of the jail or any other Government servant, or any person employed in or visiting the jail, or. . (xii a) goes on hunger strike (other than a token strike), or. shall be deemed to have committed a jail off once.
Rule 41 is important and bears particularly on the question which we have to decide.
It provides:" (1) Where upon such enquiry as he thinks fit to make, the Superintendent is satisfied that a detenu is guilty of a jail offence, he may award the detenu one or more of the following punishments: (a) confinement in cells for a period not exceeding 14 days (d) cancellation or reduction, for a period not exceeding two months of the privilege of writing and receiving letters or of receiving newspapers an books, (e) cancellation or reduction, for a period not exceeding two months of the privilege of having interviews 747 (2) If any detenu is guilty of a jail offence which by reason of his having frequently committed such A offences or otherwise is in the opinion of the Superintendent not adequately punishable by him under the provisions of sub rule (1), he may forward such detenu to the Court of a Magistrate of the first class having jurisdiction, and such Magistrate shall thereupon inquire into and try the charge so brought against the detenu and upon conviction shall sentence him to imprisonment for a term not exceeding one year: Provided that where the act constituting the offence ' constitutes an offence punishable under the Indian Penal Code with imprisonment for a term exceeding one year, nothing in this rule shall preclude the detenu from being tried and sentenced for such offence in accordance with the provisions of the Indian Penal Code.
" It is clear from the above rules that the Jail Super intendent is constituted the authority for determining whether a detenu is guilty of a jail offence and for the award to such a detenu of one or more of the punishments prescribed in rule 41.
If this punishment is considered to be adequate the Jail Superintendent is to award him the appropriate punishment.
No procedure is prescribed by the rules and the Superintendent is not required to act only on evidence given on oath.
He can punish after such enquiry as he thinks fit to make.
Thus he may not take any evidence or make any judicial enquiry at all but may yet punish.
If however the detenu cannot in the opinion of the Jail Superintendent be adequately punished by him by reason of his having frequently committed such offence or otherwise the Jail Superintendent is empowered to forward such a detenu to the Court of a Magistrate of the First Class having jurisdiction and the jail offence in that case can be enquired into by the Magistrate who would try the charge brought against the detenu, convict him and sentence him to imprisonment for a term not exceeding one year.
The proviso covers the cases where the offence is Punishable with imprisonment for a term exceeding 97 748 one year under the Indian Penal Code and nothing in rule 41 is to preclude the detenu from being tried and sentenced for such offence in accordance with the provisions of the Indian Penal Code.
The whole scheme of rule 41 is to constitute the Jail superintendent only an administrative authority to maintain jail discipline and inflict summary punishment on the detenus for breach of that discipline by committing a jail offence.
It is only when the Jail Superintendent considers that the offence is not adequately punishable by him that he, can send the case to the Magis trate.
If he actually himself punishes he cannot, under this rule, refer the case again to the Magistrate.
A reference by him after punishment it will be wholly unauthorised and without jurisdiction and the prosecution before the Magistrate would be illegal and not in accordance with procedure established by law.
It was contended that under sections 45, 46 and 52 of the Prisons Act (IX of 1894) the Jail Superintendent was constituted an authority bound to act judicially for the purposes of enquiry into and trial of the prisoners for similar offences and the detenus under the Punjab Communist Detenus Rules, 1950, being put in the same category as civil prisoners the proceedings before the Jail Superintendent for having committed the Jail offences under rules 40 and 41 above amounted to a prosecution of the petitioners before him as a judicial tribunal.
It was on the other hand contended by the Advocate General of Punjab that the Punjab Communist Detenus Rules, 1950, constituted a self contained code regulating the place and conditions of detention of these detenus, that the aforesaid sections of the , had.
no application to their case and the proceedings which took place before the Jail Superintendent in the present case were therefore not judicial proceedings and there was no prosecution and punishment of the petitioners within the meaning of article 20 (2).
We accept the contention of the AdvocateGeneral of Punjab.
The petitioners were communist detenus and were governed by the Punjab Communist 749 Detenus Rules, 1950, which were framed by the Government of Punjab under section 4(a) of the set out above and which constituted the body of rules prescribing the conditions of their maintenance, discipline, etc.
Their confinement in the prisons was for the sake of administrative convenience and was also prescribed by the rules themselves and the provisions of the did not apply to them.
It could not therefore be validly contended that the proceedings taken against the petitioners by the Jail Superintendent constituted a prosecution and punishment of the petitioners before a judicial tribunal.
So far as the jail offence alleged to have been committed by reason of the petitioners having resorted to hunger strike was concerned, the Jail Superintendent obviously considered that he could adequately punish the petitioners for that jail offence and he did not think it necessary to have resort to the provisions of rule 41 (2) and forward the petitioners to the Court of the Magistrate without having himself dealt with them.
It is common ground that the Jail Superintendent acted under rule 41 (1), and having satisfied himself that the petitioners were guilty of that jail offence awarded them one or more of the punishments therein prescribed, viz., stopping the letters and interviews for two months with effect from the 7th February, 1950, and stopping the papers and books for the duration of the hunger strike.
In our opinion this was tantamount to inflicting punishment on all the three petitioners for this jail offence and that having been done it was not competent to the Jail Superintendent after 7 1/2 months of the hunger strike to forward the petitioners to the Court of the Magistrate as be purported to do, and such reference was wholly unauthorised by the rule and without jurisdiction and the prosecution before ' the Magistrate is obviously not in accordance with procedure established by law and the petitioners may well complain of a breach or a threatened breach of the fundamental right guaranteed to them by article 21 of the Constitution in that the prosecution of the 750 petitioners before the Magistrate for the jail offence of having resorted to the hunger strike was not competent according to the procedure established by law.
The Petitions Nos. 171 of 1951 and 172 of 1951 filed by Vidya Rattan and Parma Nand must ' therefore be accepted and their prosecution in the Court of Shri P. L. Soudhi, M.I.C., Ferozepur, under rule 41(2) of the Punjab Communist Detenus Rules, 1950, for having committed a jail offence in resorting to hunger strike must be quashed.
The same order will also be passed in the petition of Jagjit Singh, being Petition No. 170 of 1951, in regard to the jail offence committed by him by having resorted to the hunger strike.
Jagjit Singh however is being prosecuted in the Court of the Magistrate for having committed offences under sections 332 and 353 as also sections 147 and 149 of the Indian Penal Code.
It was contended by the Advocate General of Punjab that there was no prosecution and no punishment awarded to Jagjit Singh in regard to there offences; and he relied upon the entries in the punishment register under the date 6th February, 1950, with reference to these offences.
These entries in the punishment register show that Jagjit Singh was not punished for any of these offences but he was to be sent up for trial and in the meantime he was to be separately confined.
Jagjit Singh on the other hand relied in particular on the evidence of Sher Singh who was the Assistant Superintendent of the Central Jail, Ferozepur, at all material times and his evidence would have helped Jagjit Singh considerably had it not been for the fact that the entries in the punishment register completely belie his version and he further states that Jagjit Singh was punished not only for the offence of assault but also rioting which could in no event have been done by the Jail Superintendent under the rules.
So far as the prosecution under sections 147 and 149 of the Indian Penal Code is concerned that is an 751 offence which is not comprised in the jail offences enumerated in rule 40 nor could it have been dealt with by the Jail Superintendent under rule 41 (1).
That offence was moreover covered by the proviso to rule 41(2) and was exclusively triable by the Magistrate.
The prosecution of Jagjit Singh therefore before the Magistrate for the offences under sections 332 and 353 and sections 147 and 149 of the Indian Penal Code is not in violation of article 20 (2) or article 21 of the Constitution and must therefore proceed.
The result therefore is that the Petition No. 170 of 1961 filed by Jagjit Singh will be allowed only to the extent that the appropriate writ of prohibition shall issue against the respondent in regard to his prosecution for having committed a jail offence in resorting to hunger strike, but his prosecution under sections 332 and 353 and sections 147 and 149 of the Indian Penal Code will not be affected by this order.
The Petitions Nos. 171 of 1951 and 172 of 1951 filed by Vidya Rattan and Parma Nand respectively will be accepted and the appropriate writs of prohibition shall issue against the respondent as prayed for therein.
Appeal No. 81 dismissed.
Petitions Nos. 171 and 172 allowed.
Petition No. 170 partly allowed.
Agent for the appellant in Criminal Appeal No. 81: P. K. Chatterjee.
Agent for the respondent in Criminal Appeal No. 81 and Petitions Nos. 170, 171 & 172: G. K. Rajadhyaksha.
| The wording of article 20 of the Constitution and the words used therein show that the proceedings therein contemplated are proceedings of the nature of criminal proceedings before a court of law or a judicial tribunal and "prosecution" in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure.
Where a person against whom proceedings had been taken by the Sea Customs Authorities under section 167 of the Sea Customs Act and an order for confiscation of goods had been passed was subsequently prosecuted before the Presidency Magistrate for an offence under section 23 of the Foreign Exchange Regulation Act in respect of the same act 731 Held, that the proceeding before the Sea Customs Authorities was not a "prosecution" and the order for confiscation was not a " punishments inflicted by a Court or Judicial Tribunal within the meaning of article 20(2) of the Constitution and the prosecution was not barred.
The detenus in a jail made a general assault on jail officials and some of those who were removed to the cells resorted to hunger strike; and they were separately confined and letters and interviews were stopped with regard to them by the Jail Superintendent.
Some months after the hunger strike the Jail Superintendent filed complaints against them before a Magistrate under r. 41 (2) of the Punjab Communist Detenus Rules for having committed a jail offence in resorting to hunger strike and for offences under sections 332 and 353 and 147 and 149 of the Indian Penal Code: Held, (i) that the datenus were governed by the Punjab Communist Detenus Rules and not the Prisons Act and the pro ceedings taken by the Jail Superintendent against the detenus did not constitute a prosecution and punishment within the meaning of article 20 (2) so as to prevent a subsequent prosecution for offences under the Indian Penal Code; (ii) the Jail Superintendent having taken action under r. 41 (1) for the hunger strike and punished the detenus with stoppage of letters etc.
it was not open to him to make a complaint against them again to the Magistrate for the same offence of having committed a jail offence by resorting to hunger strike.
|
Appeals Nos. 26, 27 and 30 to 36 of 1952.
These were appeals under article 132 (1) of the Constitution from the Judgment and Order dated 10th January, 1952, of the Travancore, Cochin High Court in Original Petitions Nos. 5, 19, 34, 35, 71, 83, 88, 89 and 90 of 1951, quashing the assessments severally made on the respondents in each appeal under the Travancore Cochin General Sales Tax Act, 1124 M. E.
The respondents who were assessed under the Travancore General Sales Tax Act which came into force in March, 1949, claimed exemption from sales tax in respect of the purchases made by them after the Constitution of 1950 came into force till the end of the accounting year 1950 on the ground that under article 286 (1) (b) the State had no power to levy tax on such purchases.
The sales tax authorities having rejected the claim the respondents applied to the High Court under article 226 and the High Court quashed the assessments so far as they related to the said period.
The State preferred the present appeals.
These appeals were heard in part with certain other appeals in September and October, 1952, but as it was found that the material facts had not been clearly ascertained by the High Court the cases were remitted to the High Court for further enquiry and findings.
The connected appeals were disposed of on the 16th of October, 1952, and the judgment is reported as the State of Travancore Cochin vs The Bombay Co. Ltd. ([1952] S.C.R. 1112).
The hearing of these appeals was continued after the High Court had returned the record With its findings.
57 T. N. Subrahmanya Iyer, Advocate General of Travancore Cochin State (T. R. Balakrishna Iyer, with him) for the appellants.
M. K. Nambiyar (N. Palpu, with him) for the respondents in Civil Appeals Nos. 26, 27 and 30 to 36.
M. C. Setalvad, Attorney General for India and C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with them) for the Union of India.
V. K. T. Chari, Advocate General of Madras (V. V. Raghavan, with him) for the State of Madras.
V. Rajaram Iyer, Advocate General of Hyderabad (B. N. Sastri, with him) for the State of Hyderabad.
section M. Sikri, Advocate General of Punjab (M. L.Sethi,with him) for the State of Punjab.
A. R. Somanatha Iyer, Advocate General of Mysore (R. Ganapathy Iyer, with him) for the State of Mysore.
K. B. Asthana for the State of Uttar Pradesh.
(States of Bombay and Orissa were not represented.) 1953.
May 8.
The judgment of the Chief Justice and Mukherjea, Vivian Bose and Ghulam Hasan JJ. was delivered by the Chief Justice.
section R. Das J. delivered a separate judgment.
PATANJALI SASTRI C. J.
These are appeals from an order of the High Court of Travancore Cochin quashing the assessments severally made on the respondents in each appeal under the Travancore Cochin General Sales Tax Act, 1124 M. E. (Act No. XVIII of 1124 M. E.) (hereinafter referred to as the Act).
The Act provided by section 3 for the levy of a tax on the total turnover of every dealer for each year.
" Turnover " is the aggregate amount for which goods are either bought or sold by a " dealer" [section 2(d)], who is a person carrying on the business of buying and selling goods [section 2 (d) ].
" Sale", with all its grammatical variations and cognate expressions, is defined as meaning, among other things, every transfer 8 58 of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration [section 2(h)].
The sale or purchase is to be deemed to have taken place in the State, wherever the contract might have been made, if the goods were actually in the State when the contract was made or, if the goods are actually produced in the State, at any time after the contract in respect thereof was made.
By section 3 (4) the turnover is to be determined in accordance with such rules as may be prescribed, and rule 4 of the rules framed under the Act prescribes that, in the case of certain goods including " cashew and its kernel", the gross turnover of a dealer is the amount for which the goods were bought by him, and in all other cases the amount for which the goods were sold by him.
The respondents are dealers in cashew nuts in the State, and their business consists in importing raw cashew nuts from abroad and the neighbouring districts in the State of Madras in addition to purchases made in the local market, and, after converting them by means of certain processes into edible kernels, exporting the kernels to other countries, mainly America.
The oil pressed from the shells removed from the cashewnuts was also exported.
The Constitution having come into force on January 26, 1950, the respondent in each appeal claimed exemption under article 286 (1) (b) in respect of the purchases made from that date till May 29, 1950, the end of the account year.
The sales tax authorities having rejected the claim, the respondents applied to the High Court under article 226, and that court upheld the claim and quashed the assessments in so far as they related to the said period.
The State has preferred the appeals.
The appeals were heard in part along with certain other appeals from the same order, and as it was found that the material facts relating to the course of business of the respondents in the present appeals had not been clearly ascertained, these appeals were remitted to the High Court for further enquiry and 59 findings in regard to those matters.
The connected appeals, however, in which the materials on record were found sufficient for their disposal were finally decided, and the decision is reported in The State of Travancore Cochin vs The Bombay Co. Ltd. (1) (hereinafter referred to as the previous decision).
Before considering how far the cashew nut purchases made by the respondents are, on the findings returned by the High Court, entitled to the protection of article 286(1)(b), it is necessary first to ascertain the scope of such protection.
That clause, so far as it is material here, reads thus: 286.
(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) * * * * * * (b)in the course of the import of the goods into, or export of the goods out of, the territory of India.
In the previous decision this Court referred to four different views then adumbrated in the course of the argument as to the meaning and scope of the said sub clause as follows: (1) The exemption is limited to sales by export and purchases by import, that is to say, those sales and purchases which occasion the export or import, as the case may be, and extends to no other transactions however directly or immediately connected, in intention or purpose, with such sales or purchases, and wheresoever the property in the goods may pass to the buyer.
(2) In addition to the sales and purchases of the kind described above, the exemption covers the last purchase by the exporter and the first sale by the importer if any, so directly and proximately connected with the export sale or import purchase as to form part of the same transaction.
(3) The exemption covers only those sales and purchases under which the property in the goods concerned is transferred from the seller to the buyer during (1) ; 60 the transit, that is, after the goods begin to move and before they reach their foreign destination.
(4) The view which found favour with the learned Judges of the High Court, namely, "the clause is not restricted to the point of time at which goods are imported into or exported from India; the series of transactions which necessarily precede export or import of goods will come within the purview of this clause.
" This Court, however, found it unnecessary for the purpose of the cases then before it to go any further than to hold that " whatever else may or may not fall within article 286 (1) (b), sales and purchases which themselves occasion the export or import of the goods, as the case may be, out of or into the territory of India come within the exemption" and that the third view set out above, which was put forward on behalf of the State of Bombay and which seeks to limit the operation of the clause exclusively to sales and purchases effected during the transit of the goods, was too narrow and could not be accepted.
It may be mentioned at once, to clear the ground, that if the Bombay view was considered to be too narrow, the view expressed by the Court below cannot but be regarded as too wide.
This, indeed, was recognised by learned counsel who appeared in the cases, none of whom made any serious attempt to support it.
Nor was any question raised or argument advanced as to the scope and effect of clause (2) of article 286, for, although the respondents in two of these appeals(1) purchased cashew nuts in the adjoining districts of the State of Madras during the period in question, it was not disputed that such purchases unless they were exempt under article 286(1)(a), would fall within the explanation to clause (1) (a) as interpreted in the majority decision ', of this court in the recent case of The State of Bombay vs United Motors (India) Ltd. (2), or under the Sales Tax Continuance Order, 1950 (C. O. No. 7 of 1950), issued by the President on January 26, 1950, in exercise of the powers conferred by the proviso to clause (2) of article 286, and would, in either case, be taxable.
(1) Civil Appeals Nos. 33 and 36 of 1952, (2) [1953] S.C.R. 1069.
61 With reference to the aforesaid decision, it may be mentioned in passing that in order to remedy what was felt to be the unsatisfactory position in regard to the levy of tax by the States in America on sales in interstate commerce, the North Carolina Department of Revenue proposed that Congress should pass legislation authorising the States to tax certain sales in interstate commerce.
The proposed bill ran thus: " That all taxes levied by any State upon sales of property or measured by sales of property may be levied upon or measured by sales of property in inter state commerce by the state into which the property is moved for use or consumption therein, in the same manner and to the same extent that said taxes are levied upon or measured by sales of property not in inter state commerce.
Provided: that no State shall discriminate against sales of property in inter state commerce; nor shall any state discriminate against the sale of the products of any other state.
Provided, further: that no state shall tax the sale in inter state commerce of property transported for the purpose of resale by the consignee as a merchant or as a manufacturer.
Provided, further: that no county, city, or town, or other subdivision of any State shall levy a tax upon or measure any tax by sales of property in interstate commerce"(1).
It is interesting to note that the bill sought to bring about substantially the same result as the combined operation of article 286 clause (1) (a) explanation, clause (2) and article 304 as they were interpreted by the majority in that decision would produce.
It is possible that these provisions of our Constitution were inspired by the proposed bill.
The only question debated before us was whether in addition to the export sale and import purchase, which were held in the previous decision to be covered by the exemption under clause (1) (b), the following two categories of sale or purchase would also fall within the, scope of that exemption: (2) See Selected Essays on Constitutional Law, Vol.
I, Book V, P. 367 published by the Association of American Law Schools, 1938.
62 (1) The last purchase of goods made by the exporter for the purpose of exporting them to implement orders already received from a foreign buyer or expected to be received subsequently in the course of business, and the first sale by the importer to fulfil orders pursuant to which the goods were imported or orders expected to be received after the import.
(2) Sales or purchases of goods effected within the State by transfer of shipping documents while the goods are in the course of transit.
As regards the first mentioned category, we are of opinion that the transactions are not within the protection of clause (1) (b) What is exempted under the clause is the sale or purchase of goods taking place in the course of the import of the goods into or export of the goods out of the territory of India.
It is obvious that the words "import into" and "export out of" in this context do not refer to the article or commodity imported or exported.
The reference to "the goods" and to "the territory of India" make it clear that the words "export out of" and "import into" mean the exportation out of the country and importation into the country respectively.
The word "course" etymologically denotes movement from one point to another, and the expression "in the course of" not only implies a period of time during which the movement is in progress but postulates also a connected relation.
For instance, it has been held that the words "debts due to the bankrupt in the course of his trade" in section 15(5) of the English Bankruptcy Act, 1869, do not extend to all debts due to the bankrupt during the period of his trading but include only debts connected with the trade [see In re, Pryce, ex parte Rensburg(1).] A sale in the course of export out of the country should similarly be understood in the context of clause (1)(b) as meaning a sale taking place not only during the activities directed to the end of exportation of the goods out of the country but also as part of or connected with such activities.
The time (1) and Williams on Bankruptcy, 16th Edn., p. 307.
63 factor alone is not determinative.
The previous decision proceeded on this view and emphasised the integral relation between the two where the contract of sale itself occasioned the export as the ground for holding that such a sale was one taking place in the course of export.
It is, however, contended that on this principle of connected or integrated activities a purchase for the purpose of export must be regarded as covered by the exemption under clause (1) (b).
We are unable to agree.
The phrase "integrated activities" was used in the previous decision to denote that "such a sale" (i.e., a sale which occasions the export) "cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction.
" It is in that sense that the two activities the sale and the export were said to be integrated.
A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done "in the course of the export of the goods out of the territory of India", anymore than the other two activities can be so regarded.
As point ed out by a recent writer "From the legal point of view it is essential to distinguish the contract of sale which has as its object the exportation of goods from this country from other contracts of sale relating to the same goods, but not being the direct and immediate cause for the shipment of the goods.
When a merchant shipper in the United Kingdom buys for the purpose of export goods from a manufacturer in the same country the contract of sale is a home transaction; but when he resells these goods to a buyer abroad that contract of sale has to be classified as an export transaction"(1).
This passage shows that, in view of the distinct character and quality of the two transactions, it is not correct to speak of a purchase for export as an activity so integrated with the exportation that the former could be regarded as done "in the course of " the latter.
The same reasoning applies to the first (1) Schmittoff Export Trade, 2nd Edn., P. 3. 64 sale after import which is a distinct local transaction effected after the importation of the goods into the country has been completed, and having no integral relation with it.
Any attempt therefore to invoke the authority of the previous decision in support of the suggested extension of the protection of clause (1)(b) 'to the last purchase for the purpose of export and the first sale after import on the ground of integrated activities must fail.
Nor is it correct to say that it is necessary to extend the exemption to these transactions to avoid double taxation.
It is true that in the previous decision it was indicated that the object underlying the exemption was the avoidance of double taxation on the foreign trade of this country which is of great importance to the nation 's economy.
But the double taxation sought to be avoided consisted in the imposition of export duty by the Central Government and the imposition of sales tax by the State Government on the same transaction in its different aspects as an export and a sale.
Such double taxation is already avoided by our holding that the export sale and the import purchase are exempt under clause (b) from the levy of sales tax by the State.
The foreign trade of this country thus already enjoys immunity from double tax burden and suffers only one tax, namely, the export or import duty as the case may be.
The claim now made for extension of the exemption under clause (1)(b) in the name of avoiding double taxation cannot be supported.
Not the least among the reasons for rejecting the view that the last purchase for the purpose of export and the first sale after import are also within clause (1) (b) is the practical difficulty in giving effect to the exemption in regard to these transactions, having regard to the general pattern of sale tax legislation in this country of which our constitution makers must have been well aware.
The tax is usually levied on the annual turnover of the seller who is allowed under certain conditions to pass it on to the buyer by adding it to the price charged for the goods at each individual sale.
Supposing A is the seller from whom 65 B the export merchant purchases the goods for export.
If the sale is to be exempt, how is A to be satisfied that the goods would actually be exported subsequently? And even if they were, it must be difficult for A to prove to the Sales Tax Officer that they were so exported by B if proof was required.
On the other hand, B might be keeping the goods, waiting for orders to come, or might change his mind and not export the goods at all but sell them locally.
In that case, what would be the position of A vis a vis the Sales Tax Officer demanding the tax ? Could A escape liability, if he failed to collect the tax from B at the time of the sale ? Or is A to collect the tax, ignoring B 's declaration of his intention to export and leaving him to apply for refund by producing evidence of actual export, whenever that takes place? Even if a sales tax enactment provides for adjustment on those lines, would not such legislation, in so far as it compels B to suffer the tax until he actually exports the goods, contravene clause (1)(b) which ex hypothesi exempts the transaction from sales tax? And what would be the position if the goods were burnt or otherwise lost in the meanwhile, and the export never took place? Athough, as pointed out in the previous decision, American cases are not of much assistance in interpreting article 286 because of the different wording of the import export clause of the Federal Constitution, it is interesting to see that such uncertainties led the American courts to lay down the rule that "It is the entrance of the articles into the export stream that marks the start of the process of exportation.
Then there is certainty that the goods are headed for their foreign destination and will not be diverted to domestic use.
Nothing less will suffice.": Empresa Siderurgica, section A. vs Merced(1).
Similar difficulties and uncertainties are encountered in bringing within the exemption the first sale after import.
How is the exemption to be applied to the (1) ; 9 66 goods imported from abroad after they are mingled with other goods and lose their distinctive character as imports? Here again, the American courts, with their practical approach to such problems, have evolved the doctrine of "original or unopened package" that is to say, the rule that the first sale of imported goods will 'be exempt from State taxation provided only such sale is made in the original packages in which the goods have arrived.
Any sale of such goods made after the package is opened does not enjoy such exemption.
Are we to import the same doctrine here to make the exemption workable ? Even in America, as pointed out in Balsara 's case(1), difficulties arose from time to time in applying the doctrine as "sometimes very intricate questions arose before the courts such as whether the doctrine applied to the larger cases only or to the smaller packages contained therein or whether it applied to smaller paper packages of cigarettes taken from loose files of packages at the factory and transported in baskets.
" Hence this court has unanimously decided that "the doctrine has no place in this country" following the lead of Gwyer C. J. in the earlier case of Boddu Paidanna(2).
It was said that clause (1) (b) should be construed in the light of the constitutional purpose and the commercial background and reference was made to the manner in which a large proportion of the export trade of the country was carried on by merchant houses who purchased goods from the producers and manufacturers to resell them to buyers abroad by means of contracts concluded with them.
Similarly with regard to import trade, large import houses imported machinery and consumer goods wholesale and sold them to retail dealers or, in some cases, to the customers direct.
This practice, it was argued, must have been well known to the makers of our Constitution, and it was reasonable to assume that they realised the importance of the foreign trade to the well being of the country and would not have desired to cripple the same by allowing the States to (1) ; , 699.
(2) 67 tax such purchases and sales by the export and import merchants in this country.
Such general considerations based largely on speculation are not of much assistance in construing the scope and effect of a specific constitutional provision seeking to restrict the power of State taxation.
It is true, as pointed out in the previous decision, that the export import trade is important to our national economy, but it is no less true that the State power of taxation is essential for carrying on its administration, and it must be as much the constitutional purpose to protect the one as not unduly to curtail the other.
The question really is, how far did the constitution makers want to go in protecting the foreign trade by restricting the power of taxing sales or purchases of goods which they conferred on the States under entry 54 of List II.
The problem before them was one of balancing and reconciling the rival claims of foreign trade in the interests of our national economy and of the State 's power of taxation in the interests of the expanding social welfare needs of the people committed to its charge, and we have their solution as expressed in the terms of clause (1) (b).
It is for the court to interpret the true meaning and scope of those terms without assuming that the one constitutional purpose was regarded as more important than the other.
This court has already held in the previous decision that clause (1) (b) protects the export import trade of this country from double taxation by prohibiting the imposition of sales tax by the State on export sales and import purchases, and we find no warrant in the language employed to extend the protection to cover the last purchase before export or the first sale after import.
As regards sales or purchases effected in the State by transfer of shipping (c.i.f.) documents while the goods are still in transit, we have already observed that the words "in the course of" imply a movement or progress and, therefore, a beginning and an end of such movement or progress.
As clause (1) (b) is concerned only with exempting certain sales or purchases from taxation by the States in this country, it is 68 sufficient to determine where the course of export begins and where the course of import ends.
In this connection, it is useful to remember that the power to make laws with respect to duties of customs including export duties (entry 83 of List I) and also with respect to import and export across customs frontiers and the 'definition of customs frontiers (entry 41 of List 1) is vested exclusively in the Central Legislature, and detailed provisions have been made in the Indian , for the levy of customs duties by the officers of the Central Government who are stationed along customs frontiers as defined by the Central Government where, after appraising the goods exported or imported, the duties chargeable, if any, are computed and levied, and it is not until this process is completed that the goods can be shipped for transportation or cleared by the consignee or his representatives as the, case may be.
It would seem, therefore, logical to hold that the course of the export out of, or of the import into, the territory of India does not commence or terminate until the goods cross the customs barrier.
It is, however, to be noted that the question of imposing sales tax on transfer of goods in the course of export would not often arise in practice for, where the goods are transported pursuant to a contract of sale already concluded with a foreign buyer and the shipping documents have been forwarded to him, any further sale of such goods by the Indian seller is impossible, and where the export trade is conducted through representatives or branch offices, the sale by the latter of the exported goods usually takes place abroad and would not then be subjected to tax by the State in India.
It is in relation to import of goods from abroad that the question of exemption assumes practical importance.
It is well known that sales or purchases by transfer of shipping documents while the goods are in transit are a characteristic feature of foreign trade and as they take place in the course of import as defined above, and are regarded commercially as incident to the import transaction, they fall within the terms of clause (1) (b) and would be entitled, in our view, to the protection of that 69 clause, if the State is constitutionally competent to tax such sales, as to which we express no opinion.
Our conclusions may be summed up as follows (1) Sales by export and purchases by import fall within the exemption under article 286 (1) (b).
This was held in the previous decision.
(2) Purchases in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs barrier are not within the exemption.
(3)Sales in the State by the exporter or importer by transfer of shipping documents while the goods are beyond the customs barrier are within the exemption, assuming that the State power of taxation extends to such transactions.
It remains to consider in the light of the foregoing discussion how far the cashew nut purchases made by the respondents are within the exemption under article 286.
It will be recalled that these purchases fell into three groups: I. Purchases made in the local market, II.
Purchases from the neighbouring districts of the State of Madras, and III.
Imports from Africa.
As regards Group 1, the High Court finds that the purchases of raw nuts whether African or Indian are all made with the object of exporting their kernels" though there were some negligible sales in the local market of what are called " factory rejects".
The High Court further finds that the bulk of the kernels were in fact exported by the respondents themselves, a small quantity being sold by the respondents to other exporters who also subsequently exported the same.
Thus, on the whole, respondents could be said to have purchased the raw nuts for the purpose of exporting the kernels and to have actually exported them.
But, it will be seen, the purchases are not covered by the exemption on the construction we have placed on clause (1) (b), even if the difference between the, raw materials purchased and the manufactured 70 goods (kernels) exported is to be ignored.
It may, however, be mentioned here that the High Court has found that the raw cashew nuts and the kernels manufactured out of them by various processes, partly mechanical and partly manual, are not commercially the same commodity.
This finding, which is not seriously disputed before us, would be an additional ground for rejecting the claim to exemption in respect of these purchases, as the language of clause (1) (b) clearly requires as a condition of the exemption that the export must be of the goods whose sale or purchase took place in the course of export.
As regards Group 11, the High Court has found that such purchases were made only by the respondents in Civil Appeals Nos. 33 and 36 of 1952.
The High Court 's finding as to how these purchases and the deliveries under them were effected is by no means clear.
The respondent 's contention was that the purchases were effected and the deliveries taken by their own paid servants outside the State of Travancore Cochin, and it was thus a case of a person buying goods and taking delivery thereof outside the State and bringing them across the border after the transaction was completed in all respects outside the State.
On the other hand, the contention on behalf of the State was that though the purchases were made outside the State in the neighbouring districts of Madras, deliveries were effected through the ordinary commercial channels by employing commission agents who made the purchases and arranged for the deliveries at the respondents ' depots at Trichur or Quilon.
All that can be said here is that, if the transactions took place in the manner alleged by the respondents in these two appeals, they would be exempt under clause (1) (a).
This indeed was not disputed by the Advocate General of the, appellant State.
On the other hand, if, as claimed by the Advocate General, the purchases were effected by the employment of firms doing business as commission agents outside the State, and the deliveries were made through normal commercial channels, the transactions would partake of an inter State character and fall under clause (2).
In that case, it would be un 71 necessary to inquire further whether they would be covered by the explanation to clause (1)(a), as they would be clearly taxable under the President 's Order (C. O .
No. 7 of 1950) to which reference has been made already, as it was admitted that sales tax was validly levied on such purchases before the commencement of the Constitution.
As the taxability of such purchase,, on either view of the facts was not disputed, no arguments were addressed to us on the scope of clause (2) and the explanation to clause (1)(a), as has, been stated.
Group III may be sub divided into two categories according to the findings of the high Court: (a) purchases made through intermediaries called in these proceedings as"the Bombay party" doing business as commission agents at Bombay, who acted as agents for the respondents charging commission.
The dealings are thus described by the High Court: "The goods are purchased when they are in the high seas and shipped from the African port to Cochin or Quilon.
Goods are never landed at Bombay.
The Bombay party only arranges for purchases on behalf of the assessees, gets delivery of the shipping documents on payment at Bombay through a bank which advances money against the shipping documents and collects the same from the assessees at destination", and (b) the Bombay party indented the goods on their own account and sold the goods as principals to the respondents and other customers; but the goods were shipped direct to Cochin or Quilon on c. i. f. terms.
The shipping documents were made out in the name of the Bombay party as consignees and were delivered to them against payment through bankers at Bombay.
The Bombay party cleared the goods through their own representatives at the port of destination and issued separate delivery orders to the respondents and other customers for the respective quantities ordered.
It will be seen that in respect of the purchases falling under (a), the Bombay party acted merely as the agents of the respondents, privity being established between the latter and the African sellers.
The purchases are 72 thus purchases which occasioned the import, and therefore come within the exemption.
As regards (b), the Bombay party are the purchasers, and they sell the goods as principals to the respondents at the port of destination by issuing separate delivery orders against payment.
No privity being established between the respondents and the African sellers, the respondents ' purchases can only be described as purchases from the Bombay party of the goods within the State; in other words, they were local purchases and stand on the same footing as purchases falling under Group I above, and for the same reasons they do not come within the exemption.
It would appear that the cashew nuts sold and exported to the American buyers were packed in tins placed in wooden boxes.
The sales tax authorities have included the value of these packing materials in addition to the value of the kernels in computing the turnover of the respondents for purposes of assessment.
It was urged that such inclusion was inadmissible inasmuch as these articles could not be regarded as separate articles of, sale apart from the kernels which are packed therein, and that even if they were to be so regarded, their sale to the American buyers was a sale which occasioned the export just as much as the sale of the kernels.
The latter contention must prevail in view of the previous decision, and no sales tax can be levied in respect of these articles.
In the result, the decison of the High Court quashing the assessments in question is affirmed but the cases will go back to the Sales Tax Officer concerned in the respective appeals for making fresh assessments according to law and in the light of this judgment.
Each party will bear its own costs throughout.
DAS J. This and eight other appeals have been filed by the State of Travancore Cochin against the judgment and order of the High Court of that State dated the 10th January, 1952, quashing the orders of assessment of sales tax made against the respondents respectively by the Sales Tax Officer and upheld on appeal by the Assistant Commissioner.
These appeal* 73 were heard together immediately after the hearing of C.A. No. 204 of 1952 [The State of Bombay vs The United Motors (India) Ltd. & Others(1)] bad been concluded and judgment had been reserved by another Constitution Bench.
The question of construction of article 286 of the Constitution which is involved in the present appeals was also raised in the Bombay appeal.
That Constitution Bench has since delivered judgments in that appeal.
The majority of that Bench have put upon clause (1)(a), the Explanation thereto and clause (2) of that article a meaning which, in spite of my pro found respect for their opinions, I am unable to accept as correct.
It is again my misfortune that I am unable to agree to the interpretation my learned brethren are now seeking to place upon clause (1)(b) of that article.
As the questions involved in these appeals are of very great importance and as the draft of this judgment was prepared before the judgments in the Bombay appeal had been delivered I consider it right to keep my views on record for whatever they may be worth.
It is, however, needless for me to say that the majority decision in that Bombay appeal, so long as it stands, is binding on me.
The respondents in each of these appeals carry on business in what is now the United State of Travancore Cochin.
They buy raw cashew nuts locally and in neighbouring States and also import them from Africa and after putting them through a certain process they obtain cashew nut oil and edible cashew nut kernels.
They export the edible kernels to foreign countries in large quantities.
In compliance with the requirements of the relevant Sales Tax Act then in force the repondents filed returns in the prescribed forms of their respective turnovers for the period between the 17th August, 1949, and the 29th May, 1950.
Each of the respondents claimed exemption from sales tax on their respective purchases made between the 26th January, 1950, when the Constitution came into force, and the 29th May, (1) ; 10 74 1950.
The claim, however, was rejected by the Sales Tax Officer.
On appeal the Assistant Commissioner upheld the assessment orders.
The respondents appeal to the High Court.
By its judgment dated the 10th January, 1952, the High Court accepted the appeals, quashed the assessment orders in so far as they included tax on the purchases made after the date of the Constitution and directed a refund of the tax overpaid.
The State has now come up on appeal before us.
As the questions involved in these appeals are of general importance and the other States as well as the Union of India are interested in the decision, notices were directed to be issued by this court to the Advocates General of all interested States and to the Attorney General for India.
Many of these States as also the Union of India intervened and participated in the general discussion on the legal points involved in these appeals.
After several days ' hearing before us in September and October, 1952, it was found that the parties were seriously at variance on several material facts and it was felt that the appeals could not be satisfactorily disposed of without proper findings on those facts.
Accordingly on the 8th October, 1952, the appeals were remitted to the High Court with directions to investigate into the disputed facts under certain heads set forth in the annexure to the order of remand.
The High Court has now returned the records with their findings and the appeals are before us again for final disposal.
The assessments in question were made under the Travancore General Sales Tax Act, 1124 (Act XVIII of 1124).
That Act came into force on the 7th March, 1949, and was, after the commencement of the Constitution, continued in force subject to the other provisions of the Constitution and it was in operation during the period of assessment.
After the integration of Travancore and Cochin that Act was replaced by the United State of Travancore and Cochin General Sales Tax Act, 1125 (Act XI of 1125) but we are not concerned with the latter Act, for it came into force 75 on the 30th May, 1950, that is to say, immediately after the expiry of the period relevant for the purposes of these appeals.
The relevant provisions of Act XVIII of 1124 have been summarised in the judgment just read by my Lord the Chief Justice and need not be set forth again.
Suffice it to say that the rules framed under I the Act ' prescribed that in the case of cashew and its kernels the gross turnover of a dealer would be the amount for which those goods were purchased by him and, therefore, sales tax was payable on the purchase and not on the sale of cashew and its kernels.
The respondents do not contend that it was not within the power of H.H. the Maharaja of Travancore to enact that law at the time he did so but they maintain that, as after the commencement of the Constitution Travancore Cochin became a Part B State and as such amenable to and bound by the Constitution, that law, in view of article 286, could no longer impose or authorise the imposition of any tax on their purchases of raw cashewnuts.
This contention, therefore, raises important questions as to the extent of the power of the States under the Constitution to impose a tax on the sale or purchase of goods.
In order, however, to correctly appreciate the meaning and import of the relevant provisions of the Constitution it will be helpful to bear in mind what the position was prior to the commencement of the Constitution.
Under the Government of India Act, 1935, the Federal Legislature alone could make laws, under entry 19 in List I, with respect to import and export across customs frontiers as defined by the Federal Government and, under entry 44 of the same List, with respect to duties of custom including export duties.
On the other hand the Provincial Legislatures alone could make laws, under entry 26 in List II, with respect to trade and commerce within the Province, under entry 29, with respect to production, supply and distribution of goods, under entry 48, with respect to taxes on the sale of goods and under entry 49, with respect to ' cesses on the entry of goods into a 76 local area for consumption, use or sale therein.
Section 297 of that Act, however, prohibited the Provincial Legislature or Governments from imposing certain restrictions on internal trade and ended by saying that any law passed in contravention of that section would, to the extent of the contravention, be invalid.
It should be noted that clause (a) of sub section (1) of that section was directly and expressly related to and constituted a restriction on the legislative power of the Province under entries 27 and 29 and not entry 48 in List II.
That section obviously was inserted in that Act for the purpose of achieving, as far as possible, free trade within India by preventing the Provinces from checking or hampering the distribution of goods or from setting up barriers against internal trade in India regarded as one economic unit.
Pursuant to the legislative power thus conferred on them the Provincial Legislatures enacted Sales Tax Acts for their respective Provinces.
In enacting the Sales Tax Acts, the Provincial Legislatures, however, did not confine the operation of their legislation to sales or purchases which took place exclusively within their respective territories.
Although in most of those Acts "sale" was first defined as meaning a transfer of the property in the goods, so as to make the passing of the property within the Province the principal basis for the imposition of the tax, yet by means of Explanations to that definition, they gave extended meanings to that word and thereby enlarged the scope of their operation.
Thus some of those Acts purported to tax a sale or purchase irrespective of the place where it took place, if only the goods were within the Province at the time the contract for sale or purchase was made or the goods were produced or manufactured within the Province after the contract had been made.
In short, if any one or more of the ingredients of sale, e.g. the contract, delivery, payment of price, or the passing of property etc., took place within a particular Province or the goods were produced or manufactured or otherwise found there that Province felt free to impose a tax on that transaction of sale or purchase 77 although all the other ingredients thereof took place outside that Province.
The Indian States were not governed by the distribution of legislative powers contained in the Government of India Act, 1935, and were, therefore, generally free to make whatever laws they thought fit to make.
They, however, enacted Sales Tax Acts on the model of the Sales Tax Acts of neighbouring Provinces in British India.
Thus the Travancore Act XVIII of 1124 was substantially a reproduction of the Madras Sales Tax Act.
The result of the imposition of tax on the sale or purchase of goods on the basis of a very slight connection or nexus between the sale or purchase and the taxing Provinces or States was that in some cases one single transaction of sale or purchase became liable to be taxed in different Provinces or States.
This imposition of multiple taxes was certainly calculated to hamper and discourage free trade within India, which section 297 of the Government of India Act, 1935, was designed to achieve.
This was the position immediately before the Constitution of India came into operation.
Our Constitution makers were well aware of this evil.
Articles 245 and 246 distribute legislative power between Parliament and the State Legislatures as per three Lists set forth in the Seventh Schedule to the Constitution.
Thus Parliament alone is empowered to make laws, under entry 41 in the Union List, with respect to trade and commerce with foreign countries, under entry 42, with respect to inter State trade and commerce and under entry 83, with respect to duties of customs, including export duty.
The State Legislatures, on the other hand, are alone authorised to make laws, under entry 26 in the State List with respect to trade and commerce within the State, under entry 27 with respect to production, supply and distribution of goods, under entry 52 with respect to taxes on the entry of goods into a local area for consumption, use or sale therein and under entry 54 with respect to taxes on sale or purchase of goods other than newspapers.
78 It may be mentioned in passing that in List I in the Seventh Schedule to the Government of India Act, 1935, there was no separate or specific entry corresponding to entry 42 in the Union List in the Seventh Schedule to the Constitution.
This shows that our Constitution has deliberately assigned interState trade and commerce, like foreign trade, to the exclusive care of Parliament and, therefore, out of the .reach of the law making powers of the State Legis latures.
Having thus distributed legislative powers between Parliament and the State Legislatures, article 265, which is in Part XII of the Constitution and headed "Finance, Property, Contracts and Suits" provides that no tax shall be levied or collected except by authority of law.
Article 286, which is also in Part XII, imposes some restrictions on the legislative competency of the State Legislatures.
That article runs as follows: " 286.
Restrictions as to imposition of tax on the sale or purchase of goods.
(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State; or (b) in the course of the import of the goods into or export of the goods out of, the territory of India.
Explanation.
For the purposes of sub clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law 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 course of inter State trade or commerce: 79 Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions, of this clause, continue to be levied until the thirty first day of March, 1951.
(3)No law 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 community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
" In these appeals we are not concerned with sales or purchases of essential commodities and, therefore, nothing further need be said about clause (3).
Leaving out that clause, the rest of the article, broadly speaking, enjoins that no State law shall impose or authorise the imposition of tax on sale or purchase of goods made (a) outside the State, (b) in the course of the import of the goods in to or the export of the goods out of India, (c) in the course of inter State trade and commerce.
I may here mention that in the exercise of the powers conferred on him by the proviso to clause (2) of article 286 the President did, by the Sales Tax Continuance Order, 1950, direct that any tax on the sale or purchase of any goods which was being lawfully levied by the Government of any State immediately before the commencement of the Constitution should, until the 31st March, 1951, continue to be levied notwithstanding that such imposition was contrary to the provisions of clause (2) of article 286.
Quite apart from the marginal note to article 286, a cursory perusal of that article will show that its avowed purpose is to put a restriction on the power of the 80 State Legislatures to make a law imposing tax on the sale or purchase of goods under entry 54 in the State List.
It may be recalled that the Provincial Legislatures purporting to act under entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, enacted Sales Tax Acts imposing tax on sales or purchases of goods on the basis of one or more of the ingredients of sale having some connection with the Province and that this practice resulted in the imposition of multiple taxes on a single transaction of sale or purchase thereby raising the price of the commodity concerned to the serious detriment to the consumer.
That evil had to be curbed and that is what has been done by clause (1)(a) of article 286.
It imposes a ban that no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State.
This provision clearly indicates that in making it our Constitution proceeds on the footing that a sale or purchase has a location or situs.
The explanation to clause (1)(a) then goes on to say that for the purpose of sub clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has, by reason of such sale or purchase, passed in another State.
The non obstante clause in the Expla nation also clearly implies that the framers of the Constitution adopted the view that a sale or purchase has a situs and further that it ordinarily takes place at the place where the property in the goods passes.
The Explanation, however, provides that, in spite of such general law, a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State.
In effect, therefore, the Constitution, by this Explanation to clause (1)(a), acknowledges that under the general law the sale or purchase of the kind therein 81 mentioned may not really take place in the delivery State, but nevertheless requires it to be treated as if it did.
That is to say, the Explanation creates a legal fiction.
Reference may be made to Income tax Commissioner, Bombay vs Bombay Trust Corporation(1) where Viscount Dunedin explains the meaning of a legal fiction.
When a legal fiction is thus created, for what purpose, one is led to ask at once, is it so created? In In re Coal Economising Gas Company(2) the question arose as to whether under section 38 of the Companies Act, 1867, a shareholder could get his name removed from the register on the ground that the prospectus was fraudulent in that it did not disclose certain, facts, or whether his remedy was against the promoter only.
James L.J. said at pages 188 9: " The Act says that an omission shall be deemed fraudulent.
It provides that something which under the general law would not be fraudulent shall be deemed fraudulent and we are dealing with a case of that kind.
Where the Legislature provides that something is to be deemed other than it is, we must be careful to see within what bounds and for what purpose it is to be so deemed.
Now the Act does not say that the prospectus shall be deemed fraudulent simpliciter but that it shall be deemed fraudulent on the part of the person wilfully making the omission as against a shareholder having no notice of the matter omitted ; and I am of opinion that the true intent and meaning of that provision is to give a personal remedy against the wrongdoer in favour of the shareholder." So it was held that the fiction did not operate as against the company and there could, therefore, be no rectification of the register.
Again, in Ex parte Walton(3), referring to section 23 of the English Bankruptcy Act, 1869, James L.J. said: "When a statute enacts that something shall be deemed to have been done, which in fact and in truth (1) [1929] L.R.57 I.A. 49 at P. 55.
(3) [1881].
L.R. 17 Ch 756.
(2) 82 was not done, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.
" The above observations were quoted with approval by Lord Cairns and Lord Blackburn in Arthur Hill vs The East and West India Dock Company(1).
Lord Blackburn went on to add at page 458: "I think the words here 'shall be deemed to have surrendered. . . mean, shall be surrendered so far as is necessary to effectuate the purposes of the Act and no further;. . . ." In the case now before us, we have fortunately not to speculate as to the purpose for which the Explanation has introduced the fiction.
It will be noticed that the Explanation does not say simpliciter that the sale or purchase is to be deemed to take place in the delivery State.
By its opening words it expressly says that the sale or purchase is to be deemed to take place in the delivery State for the purposes of clause (1)(a).
Therefore, the only effect of this assignment of a fictional location to a particular kind of sale or purchase in a particular State is to attract the ban of clause (1)(a) and to take away the taxing power of all other States in relation to such a sale or purchase even though the other ingredients which go towards the making up of a sale or purchase are to be found within these States or even if under the general law the property in the goods passes in any of those States.
The purpose of the Explanation ends there and cannot be stretched or extended beyond that purpose.
It is said by some of the Advocates General that a sale or purchase which falls within the Explanation is subject to the taxing power of the State in which the property in the goods passes under the general law as well as to the taxing power of the State in which, by virtue of the Explanation, the property in the goods is to be deemed to pass.
On the other hand some of the other Advocates General contend that by virtue of the Explanation the latter State alone becomes entitled to tax such a sale or purchase.
Both these contentions (1) [1884] L.R. 9 App.
Cas 448, 83 appear to me to be founded on a misapprehension as to the real purpose of clause (1) (a) and the Explanation thereto.
As I have already said, the only object of clause (1)(a) is to prevent the imposition of multiple taxes on a single sale or purchase and, therefore, it provides that no law of a State shall impose a tax on sale or purchase which takes place outside the State.
Thus by one stroke the taxing power of all States outside whose territories the sale or purchase is, by the fiction, deemed, to take place is eliminated.
To say that the effect of clause (1) (a) read in the light of the Explanation is to permit both States, namely, the State where the property passes under the general law as well as the State in which, by force of the Explanation, the sale or purchase is deemed to take place, to tax such sale or purchase is to stultify the very purpose of that clause, for, then it will fail to prevent the imposition of multiple taxes which it is obviously designed to prevent.
It is quite clear also that clause(1)(a) in terms only takes away the taxing power of all States with respect to a sale or purchase which, by reason of the fiction introduced by the Explanation, is to be deemed to take place outside their respective territories.
The purpose of the Explanation is only to explain the scope of clause (1)(a).
By fictionally locating a sale or purchase in a particular State it, in effect, says that it takes place outside all other States so as to give it the benefit of the exemption of clause (1)(a).
The Explanation is neither an exception nor a proviso.
It is not its purpose nor does it purport, substantively and proprio vigore, to confer any power on any State, not even on the delivery State, to impose any tax.
The fiction of the Explanation cannot be extended to any purpose other than the purpose of clause (1)(a), that is, to any purpose other than the purpose of taking away the taxing power of all States outside whose territories the sale or purchase is, by the fiction, deemed to take place.
There its purpose ends and it cannot be used for the purpose of giving any taxing power on the delivery State, for that is quite outside its avowed purpose.
Whether the 84 delivery State can tax the sale or purchase of the kind mentioned in the Explanation will depend on other provisions of the Constitution.
Neither clause (1) (a) nor the Explanation has any bearing on that questionl.
It is urged that even if by virtue of clause (1)(a) all States in relation to which a sale or purchase is, by the Explanation, to be deemed to take place outside their limits are precluded from taxing such sale or purchase and assuming that the Explanation does not, by implication or otherwise, permit even the delivery State to tax such sale or purchase, nevertheless the delivery State has the power under entry 54 in the State List read with article 100(3) of the Constitution to make a law imposing a tax on such sale or purchase.
This certainly would be the position if there was nothing else in the Constitution.
It should be borne in mind that the State Legislatures may make laws with respect to taxes on sale or purchase of goods (entry 54).
If in purported exercise of powers under those entries a State Legislature makes a law imposing taxes on sale or purchase which partakes of the character of a sale or purchase made in the course of interState trade or commerce it may quite easily encroach upon the Union Legislative field under entry 42 in the Union List and such encroachment may conceivably give rise to questions as to the validity of the State legislation.
It is in order to protect the free flow of inter State trade, which is placed in the care of Parliament alone, against any interference by State taxation and to prevent a recourse to the argument of pith and substance in justification of such encroachment by a State on the Union field that the Constitution, by article 286 (2), has expressly placed a restriction on the legislative power of the State in relation to tax on inter State sale or purchase.
Clause (2) of article 286 provides that, except in so far as Parliament may by law otherwise provide, no law of a State shall impose a tax on the sale or purchase of goods when such a sale or purchase takes place in the course of inter State trade or commerce.
Clause (2), 85 therefore, places yet another ban on the taxing power of the State under entry 54 read with article 100 (3), in addition to the ban imposed by clause (1) (a).
A sale or purchase contemplated by the Explanation to clause (1) (a) undoubtedly partakes of the nature of a sale or purchase made in the course of inter State trade and, therefore, no State, whether it is the State in which the property in the goods passes under the general law or the State where the goods are delivered as mentioned in the Explanation, can impose a tax on such sale or purchase, unless and until Parliament lifts this ban.
This appears to me to be the purpose and design of clause (2).
It is said that if the sale or purchase referred to in the Explanation is to be bit by clause (2) then clause (1) (a) was wholly redundant, for there was no point in exempting it from the ban imposed by clause (1)(a)and hittin it by clause (2).
As already stated the purposeof clause (1)(a) is to place a sale or purchase taking place outside a State beyond the taxing power of that State.
The Explanation only explains, by an illustration as it were, the scope of that ban.
Clause (1) (a) only contemplates one aspect of a sale or purchase, namely, its territorial location, and by imposing a ban on the taxing power of a State with respect to a sale or purchase, which takes place outside its limits, it purports to remedy the particular evil of multiple taxation founded on the nexus theory to which reference has been made.
That is the limited purpose of clause (1) (a) and that purpose is fulfilled by placing a ban on those States in relation to which a sale or purchase is, by reason of the Explanation, deemed to take place outside their territories.
Whether the delivery State where the sale or purchase is deemed to take place can tax such a sale or purchase is not, as I have said, the concern of clause (1) (a) or the Explanation.
It is only when the question of the competency of a State Legislature under entry 54 of the State List to make a law imposing a tax on a sale or purchase which by the fiction is deemed to.
take place within its territory is raised that clause (2) comes 86 into play.
That clause looks at a sale or purchase in its inter State character and imposes another ban in the interest of the freedom of internal trade.
The immediate purpose of the two bans are, therefore, essentially different and I see Do reason to hold that although clause (1)(a) read with the Explanation does not expressly authorise the State, in which the sale or purchase is, by the Explanation, to be deemed to take place, to tax such sale or purchase, it must nevertheless, by implication, be regarded not only as having authorised that State to do so but as having also exempted it from the ban imposed by clause (2).
To adopt this course is to resort to the fiction created by the Explanation for quite a different and collateral purpose which is entirely beyond its avowed purpose.
This, as I have explained, is, on principle and on authority, not permissible for the court to do.
The same argument is advanced in a different and more attractive language.
It is urged that once it is determined, with the aid of the fiction introduced by the Explanation that a particular sale or purchase has taken place within the delivery State, it must follow as a corollary that the transaction loses its inter State character and falls outside the purview of clause (2), not because the definition in the Explanation is used for the purpose of clause (2) but because such sale or purchase becomes, in the eye of the law, a purely local transaction.
I am unable to accept this argument which appears to me to overlook the declared purposes of clause (1)(a) and of the Explanation.
In all interState sale or purchase the property passes and the sale or purchase takes place in one or the other State according to the rules laid down in the Sale of Goods Act and the inter State character of the sale or purchase is not affected or altered by the fact of the property passing in one State rather than in another.
What is an inter State sale or purchase continues to be such, irrespective of the State where the property passes.
While, therefore, to locate a sale or purchase, by a legal fiction, in a particular State, is to make it appear to be an outside sale or purchase in relation to 87 all other States, so as to attract the ban of clause (1)(a) on those States, such location cannot possibly alter the intrinsic inter State nature or character of the sale or purchase.
A sale or purchase which falls within the Explanation does not become, in the eye of the law, a purely local sale for all purposes or for all times.
It is to be deemed to take place in the delivery State only for the purpose of clause (1)(a), i.e., for taking ing away the taxing power of all other States.
I can see no warrant, for the argument that the fiction embodied in the Explanation for this definitely expressed purpose, can be legitimately used for the entirely foreign purpose of destroying the inter State character of the transaction and converting it into an intra State sale or purchase for all purposes.
Such metamorphosis appears to me to be completely beyond the purpose and purview of clause (1) (a) and the Explanation thereto.
To accede to this argument will mean that the Sales Tax Officer of the delivery State will have jurisdiction to call upon dealers outside that State to submit returns of their turnover in respect of goods delivered by them to dealers in that State under transactions of sale made by them with dealers within that State.
Thus a dealer in, say, Pepsu who delivers goods to a dealer in, say, Travancore Cochin will become subject to the jurisdiction of the last mentioned State and will have to file returns of their turnover and support the same by producing their books of account there.
I cannot imagine that our Constitution makers intended to produce this anomalous result.
On the contrary, it appears to me that they enacted clauses (1) (a) and (2) for the very purpose of preventing this anomaly.
I repeat that it is not permissible, on principle or on authority, to extend the fiction of the Explanation beyond its immediate and avowed purpose which I have explained above.
In my judgment, until Parliament otherwise provides, all sales or purchases which take place in the course of inter State trade or commerce are, by clause (2) of article 286, made immune from taxation by the law of any State, irrespective of the place where the sales or purchases may take place, either under the general law or by virtue 88 of the fiction introduced by the Explanation to clause (1) (a).
If a particular inter State sale or purchase takes place outside a State, either under the general law or by virtue of the fiction created by the Explanation, it is exempted from taxation by the law of that State both under clause (1) (a) and clause (2).
If such inter State sale or purchase takes place within a particular State, either under the general law or by reason of the Explanation, it is still exempt from taxation even by the law of that State under clause (2), just as a sale or purchase which takes place within a State, either under the general law or by reason of the Explanation, cannot be taxed by the law of that State, if such sale or purchase takes place in the course of import or export within the meaning of clause (1) (b).
I It is next contended that the ban imposed by article 286(2) is itself subject to the provisions of article 304.
That article is one of the seven articles (articles 301 to 307) grouped under the heading "Trade, commerce and intercourse within the territory of India " in Chapter XIII.
Article 301 proclaims that, subject to the provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free.
Article 302 empowers Parliament to impose by law such restrictions on the freedom of trade, commerce and intercourse between one State and another as may be required in public interest.
Indeed, entry 42 in the Union List gives exclusive power to Parliament to make laws with respect to inter State trade and commerce and clause (2) of article 286 also recognises this power of Parliament.
Article 303 prohibits both Parliament and State Legislatures from showing preference to one State over another, or discriminating between the States.
Then comes article 304 which runs as follows: "304.
Notwithstanding anything in article 301 or article 303, the legislature of a State may by law (a) impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however as not 89 to discriminate between goods so imported and goods so manufactured or produced, and (b)impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State Without the previous sanction of the President.
" The argument is that the ban imposed by clause (2) of article 286 should, like article 301, be subordinated to article 304.
1 am unable to accept the correctness of this argument.
Article 301 is expressly made subject to the other provisions of Chapter XIII which includes article 304 but no part of article 286 is so subjected.
Article 304 (a) gives power to the State Legislatures to put a tax on goods imported from other States whereas article 286 restricts their taxing power on sale or purchase, i.e., the transaction itself as distinct from the goods.
Article 304 appears to me to be closely related to entry 52 in the State List and restricts the State 's powers under that entry but article 286 controls the State 's powers under entry 54 in the State List.
In the circumstances article 304 cannot properly be read into article 286.
Article 304, of course, can have no bearing whatever upon clause (1) (b) of article 286.
An argument is advanced suggesting that if all sales or purchases that take place in the course of interState trade and commerce are put beyond the taxing power of the States then that fact will very seriously and prejudicially affect the economy of the States and may prevent them from discharging the responsibilities, which all welfare States are expected to do.
Apart from the benefit that a free flow of trade is likely to bring to the public generally the apprehended danger appears to me, to be more assumed than real.
The proviso to clause (2) empowers the President to direct the continuation, up to the 31st March, 1951, of the sales tax which was being levied before the commencement of the Constitution and in fact the President, on 90 the same day as the Constitution came into force, actually made an order in exercise of this power as herein before stated.
There was, therefore, no immediate danger to State revenue and the status quo was maintained.
Further, clause (2) itself empowers Parliament to lift the ban imposed by it, should Parliament, in the interest of State economy, think fit to do so.
The Constitution has thus itself provided ample safeguards and this court need not assume unto itself the functions of Parliament and indirectly under the guise of interpretation seek to secure the safety of State finance which Parliament itself has adequate direct power to do.
Finally, it is said that the effect of holding that the ban imposed by clause (2) extends to all sales or purchases which take place in the course of inter State trade or commerce will be to place at a disadvantage the consumers of similar goods manufactured or produced locally, for the actual consumer will have to pay no tax if he buys similar goods manufactured in another State direct from the manu facturers or sellers in that other State.
I do not think this objection has much force.
Very few actual consumers take the trouble of importing goods for their own consumption direct from the manufacturers or sellers outside their State.
Further, the cost of carriage, handling charges and the risk of loss and damage in transit will effectively deter actual consumers from procuring goods direct from outside, for in all probability the cost of such enterprise will exceed the sales tax which the consumer will save by not buying the local goods.
Besides, if India is to be regarded as one economic unit there can be no objection to a consumer in one State getting goods cheaply from a neighbouring State.
I now pass on to another important object of article 286 which is to encourage our foreign trade.
Power is given exclusively to Parliament to make laws under entry 41 with respect to trade and commerce with foreign countries and under entry 83 with respect to duties of custom including export duties.
If in addition to the import or export duty, which Parliament 91 alone can impose, the State Legislatures were left free to make a law under entry 54 in the State List levying another tax on a sale or purchase which takes place in the course of the import of the goods into or the export of the goods out of the territory of India such double taxation will necessarily increase the price of the goods.
Such imposition may easily result in our not getting imported goods which may be of everyday requirement at a reasonable price or our not being able to compete in the world market with our exported goods.
This will discourage and hamper our foreign trade and eventually affect the Union revenue.
It is to avoid that calamity that article 286(1) (b) was introduced in the Constitution.
Article 286 (1) (b) has to be construed in the light of its aforesaid constitutional purpose and against its commercial background.
Import and export trade is principally carried on by big mercantile houses.
They purchase goods locally either against orders secured from overseas buyers or in anticipation of such orders and send the goods out of India by land or sea to be delivered eventually to the overseas buyers.
They purchase goods in foreign countries against orders secured from local Indian buyers who may be wholesale or retail dealers or in anticipation of such orders and bring them into India by land or sea to be delivered to their constituents.
In some cases the manufacturers or producers in India may themselves export their goods direct to overseas buyers and the retail dealers or even actual consumers in India may occasionally import goods direct from overseas sellers.
Export and import transactions of this clause are, however, comparatively speaking, smaller in volume than the great bulk of foreign trade put through by the big export and import houses.
The constitutional purpose is to foster this foreign trade and to preserve the Union revenue.
For achieving that purpose, the Constitution has by clause (1) (b) of article 286 imposed a ban on the State Legislatures preventing them from impinging upon the Union field of foreign trade and imposing tax on sales or purchases made in the course of import or export under the guise or pretence of making laws 92 with respect to taxes on sale or purchase of goods under entry 54 in the State List.
The question arises: what is the scope of the ban thus imposed on the States ? The answer will depend on the meaning that may be ascribed to the phrase "in the course of" occurring in clause (1) (b).
It should be noted that the same phrase is also used in clause (2) of that article.
In The State of Travancore Cochin vs The Bombay Company Ltd.(1), this court has held that " Whatever else may or may not fall within article 286(1)(b) sales and purchases which themselves occasion the exports or imports of the goods, as the case may be, out of or into the territory of India come within the exemption. .
In other words, this court has held that sales or purchases which themselves occasion the imports or exports are sales or purchases which take place " in the course of" import or export.
This was sufficient to dispose of that case and it was not then necessary to decide what else might fall within that phrase.
This court is now called upon to decide that point.
Article 286(1)(b) exempts from taxation by a State law all sales or purchases which take place "in the course of the import of the goods into or the export of the goods out of the territory of India.
" The word "course" conveys to my mind the idea of a gradual and continuous flow, an advance, a journey, a passage or progress from one place to another.
Etymologically it means and implies motion, a forward movement.
The phrase II in the course of " clearly has reference to a period of time during which the movement is in progress.
Therefore ' the words "in the course of the import of the goods into and the export of the goods out of the territory of India" obviously cover the period of time during which the goods are on their import or export journey.
This view, which has been said to be founded on mechanical test, is accepted by the Advocate General of the appellant State and, indeed, by all Advocates General other than those of Uttar Pradesh and Mysore.
The Advocates General of the two last mentioned States seek to limit the (1) ; 93 exemption only to such sales or purchases as themselves occasion the export or import.
That narrow view, however, fails to take note of the etymological meaning of the word "course" and the very large number of sales or purchases that take place while the goods are on the high seas by the endorsement and/or delivery against payment from hand to hand of the relative shipping documents covering goods worth crores of rupees.
In the case of exports from India, such sales or purchases in India will not be many for the shipping documents will ordinarily be sent to the foreign country and the sales or purchases, if any, during transit, by delivery of the shipping documents will take place there.
In some cases, however, where the goods are shipped to the exporter himself or his agent without any previous sale, such sale by delivery of shipping documents may take place in India.
But take the case of an Indian importer who places an order or indent with an overseas merchant for the supply of a large quantity of goods.
The goods are shipped and the shipping documents are sent by air mail and presented to the Indian importer by the overseas merchant through his bank.
The Indian importer receives the shipping documents against payment.
The goods are, however, on the high seas on their import journey and it will take some time before the steamer will arrive.
The market may fluctuate in the meantime.
Is the importer to wait patiently with folded hands trusting to luck that the market may be in his favour when the goods actually arrive? Is he not to be allowed to make a gain in case there is a rise in the market rate or cut his loss if there is a downward tendency in the market price ? Is he to keep his money locked up all this time ? The exigencies of foreign trade require that he must be permitted to sell the goods by delivering the shipping documents and realise his money and to again invest it in fresh imports.
This is how foreign trade is done.
It is stated in Halsbury 's Law of England (Hailsham Edn.), Vol. 29, p. 210: "280.
The commercial reason for the evolution of the 'c.i.f. ' contract lies in the length of the time taken 94 in the carriage of goods by sea.
It is to the advantage of neither seller nor buyer that the goods, the subject matter of the contract should remain en dehors commerce while they are in course of shipment.
It is to the seller 's interest to receive the money equivalent to the goods as soon as possible after the date of the contract of sale, and until he has received actual payment of the price he normally desires to be able, if he wishes, to obtain credit upon the security of the transaction.
The buyer, on the other hand, normally desires to be able to deal with the goods, for resale or finance, as soon as possible.
To meet these business necessities on the part of both buyer and seller the 'c.i.f. ' contract was evolved.
" Such sales or purchases, by delivery of shipping documents while the goods are on the high seas on their import journey were and are well recognised species of transactions done every day on a large scale in big commercial towns like Bombay and Calcutta and are indeed the necessary and concomitant incidents of foreign trade.
To hold that these sales or purchases do not take place "in the course of" import or export but are to be regarded as purely ordinary local or home transactions distinct from foreign trade, is to ignore the realities of the situation.
Such a construction will permit the imposition of tax by a State over and above the customs duty or export duty levied by Parliament.
Such double taxation on the same lot of goods will increase the price of the goods and, in the case of export, may prevent the exporters from competing in the world market and, in the case of import, will put a greater burden on the consumers.
This will eventually hamper and prejudicially affect our foreign trade and will bring about precisely that calamity which it is the intention and purpose of our Constitution to prevent.
It is, therefore, clear, to my mind, that the ban imposed by article 286(1)(b) protects all sales or purchases of goods that take place during the period the goods are on the high seas.
This construction appears to me to be imperative not only etymologically but also commercially and constitutionally.
Indeed, this view is implicit in our judgments in the case of The State Of 95 Travancore Cochin vs The Bombay Company Ltd.(1) referred to above, in which we said at page 1120: "We are not much impressed with the contention that no sale or purchase can be said to take place in the course of ' export or import unless the property in the goods is transferred to the buyer during the actual movements, as for instance where the shipping documents are endorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped or where such documents are cleared on payment or an acceptance by the Indian buyer before the arrival of the goods within the State.
This view which lays undue stress on the etymology of the word 'course ' and formulates a mechanical test for the application of clause (b) places, in our opinion, too narrow a construction upon that clause in so far as it seeks to limit its operation only to sales and purchases effected during the transit of the goods, and would, if accepted, rob the exemption of much of its usefulness.
" The question immediately arises as to how the period of time covering the "course" of import or export is to be measured.
When does it begin and when does it end? The learned Advocate General of Travancore Cochin contends and in this he is supported by all the Advocates General other than those of Uttar Pradesh and Mysore that this period is confined within two terminii, namely, when the journey of the goods begins and when it ends.
They maintain that the process of import or export ordinarily begins and ends at water 's edge, although the period of journey of the goods from the port to the place of the importer or his representative in case of import or to the port from the place of the exporter or his representative in case of export may be added to the period of the actual voyage on the high seas.
This contention cannot be accepted in view of our decision in the case of The State of TravancoreCochin vs The Bombay Co. Ltd.(1) referred to above.
According to that decision the phrase "in the course of " is not limited within these two terminii, i.e., from the point of time the goods are handed over to the carrier (1) ; , 96 upto the time they are delivered by the carrier.
By adopting the principle of integrated activities we have included the agreement for sale to, or purchase from, the foreign merchant as taking place within the period connoted by that phrase.
The agreement for sale or purchase, which occasions the export or import as the case may be, is obviously, in point of time, anterior to the actual and physical handing over of the goods to the carrier for taking the goods out of the country or for bringing them into the country as the case may be, but, nevertheless, such a sale or purchase has been held to have taken place "in the course of" export or import and as such exempt from taxation by the States.
The question is how far backward we can trace the commencement of the "course" of export and how far forward we can fix the termination of the "course" of import.
In my judgment the purchase made by the exporter to implement his agreement for sale with the foreign buyer is to be regarded as having taken place "in the course of" export.
I take this view, not because I read the words "in the course of" as synonymous with the words "for the purpose of" but because I regard the purchase by the exporter as an activity so closely integrated with the act of export as to constitute a part of the export process itself and, therefore, as having taken place " in the course of the export.
The learned Attorney General accepts this position but the Advocates General of the States demur.
They maintain that in this view of the matter one cannot stop at the last purchase by the exporter but has to include the purchase by the person who sells to the exporter and all previous sales or purchases until one reaches the producer.
I find no substance or cogency in this line of reasoning.
In the last purchase by the exporter we have at least one party who is directly concerned with or interested in the actual export.
The exporter is the connecting link, the commercial vinculum, as it were,.
between the last purchase and the export.
But in the earlier sales or purchases neither the sellers nor the purchasers are personally concerned with or interested in the actual 97 export of the goods at all.
Therefore the earlier sales or purchases may be too remote and may not be regarded as integral parts of the process of export in the same sense as the last purchase by the exporter can be so regarded.
The line of demarcation is easily perceptible.
Let me explain my meaning step by step.
As I have already stated, in some cases the exporters receive orders from the foreign buyers and then export the goods.
It has been held by us that these orders themselves occasion the export and, therefore, they take place " in the course of " export.
But these orders can occasion the export only if the exporters have the goods to export.
The exporters are not necessarily the producers or manufacturers and in great many cases they have to procure the goods to implement the foreign orders.
The overseas orders in such cases immediately necessitate the purchase of the goods and eventually occasion the export.
The three activities are so intimately and closely connected, like cause and effect, with the actual export that they may well be regarded as integral parts of the process of export itself.
As according to our previous decision the contract for sale with the foreign buyer starts the export stream and occasions the export, the purchases by the exporter to implement such contract necessarily take place, chronologically speaking, after the export stream has started and, therefore, must be an activity undertaken in the course of the export.
Logically there can be no getting away from this conclusion.
Therefore, these purchases to implement the sale which occasions the export must be immune from sales tax.
Is there any compelling reason to confine this immunity to sales or purchases to implement a foreign order or sale ? It cannot be overlooked that in a great majority of cases the export merchants, who, as I have said, are not, generally speaking, the actual producers or manufacturers of goods, start purchasing goods in advance, after taking into account the estimated quantity of the year 's total production, the prevailing local prices, the likely demand from foreign countries 13 98 and the prices ruling or likely to rule in the foreign markets.
Such anticipatory purchases form by far the largest part of the activities of the export merchants and are regarded by businessmen as necessary incidents of the export trade.
Is there any logical reason why purchases by the exporters in anticipation of future foreign orders should not also be taken as starting the " course " of the flowing stream of the export trade ? The goods, it is true, are stored in godowns for a while awaiting actual exportation but that is like a stream falling into a lake and getting out by an outlet at the other end so that the undercurrent of the flow, even if imperceptible on the surface, is nevertheless continuous.
One cannot overlook or ignore these well known preliminary but essential activities of the export merchants which necessarily precede and lead up to and, indeed, occasion or eventually make possible the ultimate physical movement of the goods.
To hold that these purchases are independent local purchases totally distinct from the export trade will be to unduly narrow down the wide meaning of the flexible phrase in the course of".
I find support for the views I have expressed above by the recent decision of the High Court of Australia in The Queen vs Wilkinson: Ex parte Brazell, Garlick and Coy (1) to which reference may now be made.
Section 11(3) of a New South Wales statute called the Marketing of Primary Products Act, 1927 1940, provides, inter alia., that every producer who, except in the course of trade or commerce between the States, sells or disposes of or delivers any commodity, in respect of which a Board has been appointed, to persons other than the Board, and every person other than the Board who, except as aforesaid, buys, accepts or receives any such commodity from a producer shall be guilty of an offence.
Brazeil, a producer of potatoes in New South Wales at Dorrigo in New South Wales agreed to sell 48 bags of potatoes of Garlick Coy & Co., who were buying agents for J. E. Long & Co., general produce merchants, whose head office was at Jennings on the New South Wales side of (1) ; 99 the border of that State and Queensland and who carried on business of purchasing and selling potatoes in both States.
It was a term of the sale that the potatoes should be delivered from Brazell 's lorry on trucks at Dorrigo in New South Wales.
The potatoes were loaded at Dorrigo railway station into a truck and consigned by Garlick Coy & Co. to J. E. Long & Co. at Wallangarra on the Queensland side of the border adjoining Jennings.
The potatoes arrived at Wallangarra and were sold by J. E. Long & Co. to a purchaser in Queensland.
Brazell was charged with the offence of disposing of and Garlick and Coy, the two partners of Garlick Coy & Co. were charged with the offence of receiving the potatoes in contravention of section 11(3) of the Act.
The question was whether the sale by Brazell to Garlick Coy & Co. in New South Wales was in the course of trade and commerce between the States.
It was found that it was no part of the contract of sale between Brazell and Garlick Coy & Co. that the potatoes would go to any ascertained buyer in New South Wales or in any other State other than Garlick Coy & Co. who were, as Brazell believed, acting as agents for J. E. Long & Co., that Brazell was only concerned with the sale of his potatoes and that when he received his money he had no further interest in the potatoes, that there was no evidence that at the time Garlick Coy & Co. received the potatoes from Brazell there was any contract in existence for sale of them to any person in Queensland or any other State or that J. E. Long & Co. had any definite orders for the supply of them to any ascertained inter State buyers or that the potatoes purchased by Garlick Coy & Co. were to fill any such orders.
There was no binding agreement between Brazell and Garlick Coy & Co. or J. E. Long & Co. that the potatoes would be sold to buyers in Queensland, The Magistrate answered the question in the negative and convicted Brazell, Garlick and Coy, who thereupon moved for a writ of prohibition to restrain the informants and the Magistrate from further proceeding on those convictions.
In a joint judgment Dixon, McTierman, Fullager and Kitto, JJ.
said : 100 "In our opinion on the foregoing facts the disposal and the receiving made the subject of the informations were in the course of trade and commerce between the States, within the meaning of the exception in section 11(3).
Under the agreement for the sale and purchase of the potatoes the agents buying were required to consign the potatoes to a railway station in Queensland, and they did so consign them.
For the purpose of the exception the delivery of the potatoes from the lorry into the railway truck can bear only the aspect of an essential and integral, even if initial, step in the transportation of the potatoes to Queensland.
" In a separate but concurring judgment Williams J. said : " It was submitted to the Magistrate that the transaction must be looked at as a whole and not split up into separate contracts of sale and purchase.
The Magistrate rejected this submission.
In doing so he fell into error.
He should have regarded the transaction as a whole.
On this basis the facts proved that the acts done by the appellants were done in the course of trade and commerce between the States.
" After stating the facts shortly Webb J. said: "The potatoes went to Queensland and were sold by the principal in that State.
It may be that there was no binding stipulation that the potatoes would be sold in another State, and that they could have been resold in New South Wales without breach of agreement.
But a legal nexus with inter State trade, by a contract with the grower, is not required to secure the immunity given by section 92.
" Reference was made in this case to the earlier case of Clements and Marshall Pty Ltd. vs Field Peas Marketing Board (1) where there were two sets of contracts, the first being contracts of sale by the producers to the dealers and the second contracts of resale by the dealers to buyers in other States.
After pointing out that it was only the second set of contracts which in themselves were inter State transactions Dixon J. said at page 429: (1) (1947) 76 C.L.R 401, 101 "We should consider the commercial significance of transactions and whether they form an integral part of a continuous flow or course of trade, which, apart from the theoretical legal possibilities, must commercially involve transfer from one State to another." The reasonings adopted by the learned Judges in the above cases apply with full force not only to clause (2) but also to clause (1)(b) of article 286 and we should construe the words "in the course of" in the same way as it has been done in the case of Queen vs Wilkinson(1).
So construed, the purchases made by the exporter even without any previous order for export form "an essential and integral, even if initial, step" in the exportation of the goods.
They form "an integral part of a continuous flow" which is commercially involved in the export process.
No "legal nexus" between these purchases and the actual physical export is required to secure immunity from State taxation.
In my judgment the last purchases by the exporters whether in fulfilment of foreign orders already secured or in anticipation of future orders must, in a commercial sense, be "in the course of " the export.
The only way to give business efficacy to article 286 (1)(b) is to construe it in this commercial sense.
Tax such purchases and you tax the export itself and by that process eventually cripple our export trade and bring about an adverse trade balance against us in the long run.
It must always be borne in mind that with our exports we pay for our imports.
The same considerations apply to the first sale by the importers of the imported goods.
I leave out of consideration the comparatively few cases of retail dealers themselves importing goods direct from overseas sellers and the still fewer cases of actual consumers importing goods for their own consumption.
In by far the largest majority of cases it is the import merchants who bring goods into the country from abroad.
Their business is to bring in the goods and thereby augment the general mass of goods in the country.
In some cases the importers secure orders from local dealers and pursuant to such orders the importers import the goods (1) ; 102 from foreign lands.
In most cases, however, the importers, in intelligent anticipation of local demands for such goods, place orders or indents with foreign sellers who, pursuant to such orders, send out the goods.
Each of these orders or indents placed with the foreign sellers by the intending importers occasions the import and these purchases by the importers are certainly "in the course of" import of the goods into India within the meaning of our previous decision, and as such exempt from sales tax.
We have also seen that the sale or purchase of goods during the period they are on the high seas is also "in the course of" import and as such immune from taxation by State law.
The question then arises as to where the course of import ends.
Does it end at the water 's edge ? If the sale by the importers while the goods are on the high seas be ,,in the course of" import and not liable to sales tax, there can be no logical reason why the first sale by the importers to dealers should not also be exempted.
If such sale is to be regarded as purely a local sale and as such liable to taxation by the States, then, in effect, the tax will be a burden on the import itself.
The importers have to pay the customs duty imposed by Parliament and if again the States impose additional taxes on the same goods such multiple taxation will raise the price of the goods to the detriment of the actual consumers and will eventually have an adverse effect on our import trade which it is the purpose of the Constitution to prevent.
After all the business of the importers who bring the goods into our country is only to make the goods available to the internal trade, for they are not usually retail dealers who sell to the consumers direct.
That business is completed only by the first sale by the importers to the dealers, wholesale or retail.
It is only after that first sale of the goods by the importers to the dealers that the goods become parts of the general mass of property in the State concerned and thereafter subject to the taxing power of that State.
The first sale by the importers to dealers, therefore, appears to me to be so inextricably wound up with the import itself that it may be commercially regarded as the culmination of the import activities and, 103 therefore, the end of the course of import.
I arrive at this conclusion not by applying the American doctrine of unopened original package, which has now been abandoned even by the Supreme Court of America and has recently been rejected by us in the Prohibition Case(1) but on a construction of the phrase "in the course of" ' in the light of its etymology, the purpose of the Constitution and against the background of the known notions and practices of businessmen engaged in foreign trade.
, If, however, a particular importer himself happens to be a retail dealer of the goods and sells the goods to the actual consumers and such cases are comparatively few then such retail sales may, like local retail sales of similar goods, be liable to sales tax by the State.
Whether an importer is or is not a retail dealer is a question of fact which is capable of proof and, therefore, need not be regarded as creating any insuperable difficulty in the matter of the assessment of the sales tax.
For reasons stated above, I find no difficulty in holding that just like the last purchases by the exporters themselves for the purpose of sending the goods out of the country the first sales by the importers to dealers of goods brought by them into the country also come within the somewhat elastic expression " in the course of " export or import.
As stated above, it is possible to draw the line there.
Reference is made to Clive M. Schmitthoff 's Export Trade (2nd Edition, page 3) where the learned lecturer says: "When a merchant shipper in the United Kingdom buys, for the purpose of export, goods from a manufacturer in the same country the contract of sale is a home transaction, but when he resells these goods to a buyer abroad that contract of sale has to be classified as an export transaction.
" The argument formulated on this authority is that this passage clearly establishes that the last purchase by the exporters and the first sales by the importers are home transactions and cannot be classified as export or import transactions at all, This distinction between (1) ; , 104 a home transaction and an export transaction made by the learned lecturer for the purposes of his book takes us nowhere.
Nor do the American decisions which distinguish between intra State trade and inter State trade throw any light on the problem of construction of article 286 (1)(b) which is couched in language quite different from that used in the American Constitution.
In America the question is clear cut, namely, is it an inter State transaction or an intra State transaction.
Our problem, on the other hand, is to find out whether a given sale or purchase has taken place "in the course of" import or export.
Simply to say that the particular sale or purchase is a home transaction does not solve our problem, for to say so is not to say that it cannot have taken place "in the course of" import or export.
Indeed, article 286 (1)(b) postulates a home transaction, that is, a transaction which takes place within the State and then places it beyond the taxing power of that State on the ground that the transaction, has taken place "in the course of " import or export.
If the transaction is not a home transaction, i.e., if it takes place outside the State, clause (1) (b) need not be invoked at all, for then clause (1)(a) will prevent that State from taxing that outside transaction.
It is only when a particular transaction is a home transaction in the sense that it take,,; place within the State that the further question arises, namely, whether that home transaction has taken place "in the course of" import or export within the meaning of clause (1)(b).
The circumstance that a sale or purchase is a home transaction does not, therefore, conclude the matter and we have yet to solve that further question by the proper construction of clause (1)(b) according to its natural meaning and in the light of the Constitutional purpose and against the commercial back ground as explained above.
A second argument founded on that passage is that if those home transactions are removed from the sphere of State taxation then the States will be deprived of one of the principal and fruitful sources of revenue and the economy of the States will be crippled and may 105 even collapse.
It is pointed out that there is no provision in clause (1)(b), such as there is in clause (2), under which Parliament may lift the ban and, therefore, to place these home transactions beyond the taxing power of the States will irretrievably deprive them of a very large part of revenue which they have been realising from these sales or purchases made by the big importers or exporters many of whom are foreigners.
There is no reason, it is urged, why they should not be made to pay sales tax like ordinary sellers or buyers in the States.
As already stated, the imposition of double taxation may eventually hamper our own foreign trade.
The object of our Constitution, apparent from the distribution of legislative powers and from article 286, is to place our inter State trade and our foreign trade beyond the taxing power of the State.
In the case of inter State trade power is expressly given to Parliament by clause (2) of that article to lift the ban but in the case of foreign trade no such power is given to Parliament by that article to relax or lift the ban imposed by clause (1) (b) on the legislative power of the State Legislatures.
It is for Parliament alone to make laws with respect to foreign trade.
If the import or export of particular commodities is not beneficial to our country then Parliament, which is in a much better position than this court to know and judge of such matters, will, I am sure, make laws restricting or even prohibiting such imports or exports.
If our imports or exports may bear the additional burden of taxation without any detriment to the consumers and our foreign trade and without any risk to the Union revenue, Parliament, I have no doubt again, will increase the customs or export duty and augment the revenue of the Union.
If on its correct interpretation clause (1)(b) of article 286 causes loss to the States ' revenue by depriving them of the taxes on such sales or purchases then such loss will clearly and solely be attributable to the intention of the Constitution as expressed in that clause.
If that clause results in any danger to the economy of the States, I have no manner of doubt that Parliament 14 106 Will make good the loss to the States on the recommendation of the Finance Commission under some appropriate article out of articles 268 to 281 grouped under the heading " Distribution of Revenues between the Union and the States " in the very chapter in which occurs article 286 which is engaging our attention.
In any event, the court must construe the Constitution as it finds it and if the construction of the plain language leads to any inconvenience to the States it will be for authority other than this court to rectify and remove the same.
It is said that it will be very difficult for the Sales Tax Officer to ascertain how much of the goods purchased by the exporters had actually been exported or how much of the goods imported by the importers had actually been distributed amongst the dealers as opposed to actual consumers.
It is pointed out that ordinarily sales tax is levied on sales and the sellers are permitted to pass on the tax to the purchasers at the time of such sales.
How, it is asked, is the seller to know whether his purchaser will actually honour his representation that he wants the goods for the purpose of export? If the seller has no confidence in the integrity of his purchaser he will not sell to him without sales tax.
The purchaser who is really exporter will not then perhaps buy from such a seller or if in the case of urgency he buys on payment of the sales tax may claim the refund, if there be any provision in that behalf, on proof that he actually exported the goods.
It is said that exporters may change their minds and sell the goods locally after obtaining the exemption or the importers may sell the goods themselves in retail to the consumers after having got the exemption.
There is no substance in this line of theoretical reasoning, for these are matters capable of being proved.
If the exporters or their sellers cannot prove to the satisfaction of the officer that the exporters purchased so much goods for export and did actually export the same or the importers or their purchasers cannot prove that the importers imported so much goods and distributed so much amongst the dealers as 107 opposed to actual consumers, they will not get the ' benefit of the exemption and that is all.
If the Sales Tax Officer finds no difficulty in ascertaining whether the goods are delivered in a State only for the purpose of consumption within that State or whether they were delivered for the purpose of resale out of that State so as to ascertain the applicability of the Explanation to clause (1) (a), why cannot the same officer find out what goods were purchased by the exporters for the purpose of export or what part of the imported goods were sold by the importers to the dealers ? If the Income tax Officer can without difficulty ascertain the income, profits and gains of a business and work out the provisions of, section 10 of the Indian Income tax Act and also can ascertain under section 42 of that Act the income deemed to accrue or arise within the taxable territory, there cannot be any insuperable difficulty in the way of the Sales Tax Officer determining the turnover of a particular dealer and working out the exemptions he is entitled to under article 286(1) (b).
In any case the assumed difficulty of the Sales Tax Officer cannot alter or affect the correct construction of the constitutional provisions in question.
To summarise : The State Legislatures, under entry 54 of the State List, have power to make laws with respect to tax on the sale or purchase of goods.
On this general power article 286 places four restrictions, namely, that no law of a State shall impose or authorise the imposition of tax on the sale or purchase of goods when such sale or purchase takes place (1) outside the State, (2) in the course of import or export, (3) in the course of inter State trade and commerce and (4) in respect of essential commodities.
The Explanation to clause (1) (a) only explains what is an outside sale or purchase, for by saying that a particular sale or purchase is to be deemed to take place in a particular State it only indicates that it is to be deemed to take place outside all other States so as to attract the ban of clause (1) (a) and thereby take away the taxing power of those other States with respect to such sale or purchase.
The Explanation does not operate as an 108 exception or a proviso but only explains sub clause (a).
The, fiction created by the Explanation is only for the purposes of sub clause (a), so that sales or purchases of the kind which fall within the Explanation get the benefit of the ban imposed by sub clause (a).
Therefore, the purpose of the Explanation read with sub clause (a) is only to take away the power of taxation of those States in relation to those sales or purchases which are to be deemed to be outside sales or purchases.
Its purpose is not and, indeed, it does not purport, to confer any taxing power on any State, and it cannot be resorted to for any such extraneous or collateral purpose.
It does not convert an inter State sale or purchase into an intra State sale for any purpose other than the limited purpose of sub clause (a).
If a sale or purchase takes place outside a State, either under the general law or by virtue of the fiction created by the Explanation, then that State cannot, under clause (1) (a), tax such sale or purchase.
If a sale or purchase takes place within a State, either under the general law or by reason of the Explanation, then, if such a sale or purchase takes place " in the course of " inter State trade and commerce, no State, not even the State where the sale or purchase takes place as aforesaid can tax it by reason of clause (2), unless and until Parliament by law provides otherwise.
A sale or purchase "in the course of" import or export within the meaning of clause (1) (b) includes (i) a sale or purchase which itself occasions the import or export as already held by this court, (ii) a sale or purchase which takes place while the goods are on the high seas on their import or export journey and (iii) the . last purchase by the exporter with a view to export and the first sale by the importer to a dealer after the arrival of the imported goods.
If a sale or purchase takes place within a State, either under the general law or by reason of the Explanation, then, if it takes place in the course of import or export as explained above, no State, not even the State within which such sale or purchase takes place can tax it by reason of clause (1) (b).
This, in short, is the true meaning and import of article 286 as I read and understand it, 109 I have already stated, however, that the majority decision of this court in C. A. No. 204 of 1952 [The State of Bombay vs The United Motors (India) Ltd.(1)] has taken a different view of the meaning of clause (1) (a), the Explanation and clause (2) of article 286.
In disposing of the present appeals, in so far as such disposal depends on those provisions, I am bound to follow the majority decision rather than my own view of them.
Bearing in mind the principles laid down by this court in The State of Travancore Cochin vs The Bombay Company Ltd.(2) and in C. A. No. 204 of 1952 [The State of Bombay vs The United Motors (India) Ltd. and others (1)] and those explained above, I now proceed to consider the rival claims on their respective merits.
There is really no substantial controversy as to the nature of the business carried on by the respondents.
All of them are exporters of cashew nut kernels on a fairly big scale.
They procure raw cashew nuts from three sources, namely, (i) from within the State of Travancore Cochin, (ii) from neighbouring States and (iii) from Africa.
Then they put the raw cashew nuts through a certain process and obtain oil and edible kernels.
These edible kernels they export to foreign countries.
It will be recalled that the Travancore Sales Tax Act imposes taxes only on the purchase of "cashew and its kernels" but not on the sale thereof.
The respondents claim exemption from sales tax for the period between the 26th January, 1950, when the Constitution came into force and the 29th May, 1950, which is the close of the assessment year.
In support of their claim for exemption they rely oil article 286 of the Constitution.
It is necessary, therefore, to take each of the three categories of purchases and see if they or any part of them come within any of the exemptions provided by that article.
As regards local purchases of raw cashew nuts there is no controversy that those purchases take place within the State and are, therefore, not entitled to the protection of article 286 (1) (a).
These purchases do not take place " in the course of " inter State trade or (1) ; (2) ; 110 commerce and, therefore, are not within clause (2) of that article.
The only question is whether these local purchases can be said to take place " in the course of " export within the meaning of article 286 (1) (b).
There is no dispute that the respondents do not sell the raw cashew nuts or any portion of it within or without the State of Travancore.
They do not sell the edible kernels, which they obtain as a result of the manufacturing process or any part of them within Travancore Cochin or any other State in India except what have been described as factory rejections of negligible quantity which are not fit for export.
All edible kernels are exported to foreign countries.
Therefore, the res pondents claim that all their purchases, whether made locally or in neighbouring States or from abroad, are, " in the course of " export within the meaning of clause (1) (b) in the sense explained above.
The appellant State, however, maintains that commercially " the goods " exported are entirely different from " the goods " purchased by reason of the process of manufacture they are put through and are, therefore, not entitled to the benefit of the ban imposed by clause (1) (b).
The High Court has, on remand, enquired into the process of manufacture through which the raw cashewnuts are passed before the edible kernels are obtained.
The High Court, in its judgment on remand, goes minutely into the different processes of baking or roasting, shelling, pressing, pealing, and so forth.
Although most of the process is done by hand, part of it is also done mechanically by drums.
Oil is extracted out of the outer shells as a result of roasting.
After roasting the outer shells are broken and the nuts are obtained.
The poison is eliminated by pealing off the inner skin.
By this process of manufacture the respondents really consume the raw cashew and produce new commodities.
The resultant products, oil and edible kernels, are well recognised commercial commodities.
They are separate articles of commerce quite distinct from the raw cashewnuts.
Indeed, it is significant that the respondents place orders for "cashew nuts " but orders are placed 111 with them for " cashew nut kernels ".
In the circumstances, " the goods " exported are not the same as the goods purchased.
The goods purchased locally are not exported.
What are exported are new commodities brought into being as a result of manufacture.
There is a transformation of the goods.
The raw cashews are consumed by the respondents in the sense that a jute ' mill consumes raw jute, or a textile mill consumes cotton and yarn.
The raw cashews not being actually exported the purchase of raw cashews cannot be said to have been made " in the course of " export so as to be entitled to immunity under clause (1) (b).
As regards the purchases of raw cashew nuts from the neighbouring States, the position, as found by the High Court on remand, is that the bulk of such purchases were made by the respondents or their agents from sellers in the neighbouring States and the goods so purchased were delivered by the sellers to the respondents or their agents in the States where the purchases took place.
The contract of purchase was fully implemented when as a direct result of the purchase delivery was given outside Travancore.
The respondents or their agents thereafter brought, the goods, which by then had become their own goods, into Travancore, by rail or otherwise.
The delivery of the goods under the contract for purchase having already taken place outside Travancore, the subsequent despatch of those goods to Travancore cannot possibly be said to have been delivery within that State as a direct result of the purchase within the meaning of the Explanation.
Indeed, the learned Advocate General of Travancore Cochin concedes that as purchases of this type did not fall within the Explanation they must be regarded as having taken place outside TravancoreCochin and must, accordingly, be exempt from taxa tion by Travancore Cochin under article 286 (1) (a).
If it could be shown that although such sales or purchases took place entirely in those other States yet they were made between two parties residing or carrying on business in two States and for the purpose of consumption or of sale in the purchasers ' State then these sales or purchases might have been said to have 112 been made "in the course of " inter State trade and commerce and as such exempt from taxation by both the States under article 286 (2).
The transactions of sale or purchase with which we are concerned having taken place within the period covered by the President 's order made under the proviso to that clause, no protection under clause (2) can be claimed for these transactions.
Further, if the cashew nuts purchased in neighbouring States were for the purpose of exporting them out of the territories of India and were actually so exported, then these purchases would be " in the course of " export and as such exempt from tax under article 286 (1) (b).
As a matter of fact, however, the cashew nuts purchased in the neighbouring States were not actually exported but were put through a process of manufacture and the goods that were exported were not the same as those that were purchased as explained above and, therefore, clause (1) (b) gives no protection to these purchases.
On the facts of these cases, these purchases, however, took place outside Travancore Cochin and as such are, therefore, immune from taxation by Travancore Cochin only under clause (1) (a) which is not affected by the President 's order made under the proviso to clause (2).
The learned Advocate General of Travancore Cochin says that there is another type of purchase from neighbouring States where the seller in the neighbouring State directly delivers the goods under the contract for sale or purchase to the respondents in Travancore.
Learned counsel for the respondents maintains that there is actually no case of purchase of this type.
It is not necessary at this stage to go into this controversy, for, the matter having been fully argued, it is just as well to lay down the correct principle applicable to such purchases, if any.
If there is no such purchase where the seller from the neighbouring State delivers the goods as a direct result of such purchase to the respondents in Travancore, no question will arise.
Assuming that there are cases of such purchases, then it is clear that the first condition of the Explanation is satisfied, namely, the goods are delivered within the State as a direct result of such purchase.
The next question is 113 was such delivery for the purpose of consumption in the State ? The raw cashew nuts, after they reach the respondents, are put through a process and new articles of commerce, namely, cashew nut oil and edible cashew nut kernels, are obtained.
It follows, therefore, that the raw cashew nut is consumed by the respondents in the sense I have mentioned.
Consequently, such purchases will fall squarely within the Explanation and will be deemed to take place in Travancore so that under clause (1)(a) the neighbouring States will not be entitled to impose any tax on these sales or purchases.
According to my view, and on the reasonings adopted in the Australian case, these purchases are "in the course of" inter State trade and as such will be protected by clause (2) but according to the majority view in the Bombay appeal, which must prevail, such purchases will become, as a result of the Explanation, an intra State purchase in Travancore and consequently out of the protection of clause (2) and liable to taxation by Travancore law.
Even if according to my view these purchases fall within clause (2) they will nevertheless be liable to be taxed under the Travancore Act, in spite of that clause, by virtue of the order made by the President in exercise of the powers conferred on him by the proviso to that clause.
These purchases will not get any protection under clause (1) (b) because the goods purchased were not the goods that were exported.
These purchases, if any, will, therefore, be liable to be taxed under the Travancore Act.
The third source from which the respondents purchase raw cashew nuts is Africa.
The respondents place orders for the purchase of raw cashew nuts with commission agents in Bombay and the Bombay agents pass on the orders to the African sellers or their agents in Bombay.
The African sellers theft send the goods by steamer and send the bills of lading, invoice etc.
to their bank in Bombay.
The bank presents the documents to the Bombay agents of the respondents and the Bombay agents pay the price 15 114 and take delivery of the shipping documents in Bombay.
The Bombay agents then prepare their own invoice showing the amounts paid by them on account of the respondents and their own commission and send their invoice together with the shipping documents to their Travancore bank.
The Travancore bank presents all these documents to the respondents who pay the Bombay agents ' invoice amount and take delivery of the shipping documents.
All these generally happen while the goods are on the high seas.
On arrival of the goods at Travancore port, the respondents clear the goods on presenting the bill of lading etc.
This is the main type of purchase of African raw cashew nuts.
The appellant State concedes that these are not liable to tax.
In the first place the purchases were outside the State and, therefore, clause (1)(a) applies.
In the next place these purchases took place I 'in the course of " import and as such are exempt from taxation under article 286(1)(b), because (i) they themselves occasioned the import as already held by this court and (ii) the property in the goods passed and the purchases took place when the goods were on the high seas.
These purchases, however, cannot be said to have taken place "in the course of" export, for reasons already explained.
There is another type of purchase of African raw cashew nuts.
There the African sellers ship raw cashew nuts on their own initiative or at the instance of their Bombay agents and while the goods are on the high seas, they are sold by endorsement and delivery of the bills of lading etc.
at Bombay to the Bombay agents of the respondents and then the same procedure is followed as in the first case.
Here the purchase by the respondents did not occasion the import, but, nevertheless, the sale or purchase was outside the State and further the goods being on the high seas at the time when the property passed such sale or purchase must be regarded as having taken place "in the course of" import of the goods according to the mechanical test explained above.
The learned Advocate General of the appellant State does not dispute that such purchases are also to go free from sales tax, 115 The next type of purchase of African raw cashewnuts is as follows: The different respondents place separate orders with the same Bombay commission agents and the Bombay commission agents place one consolidated order for the entire quantity of the goods with the African sellers.
The African sellers thereupon ship the entire lot of goods under one bill of lading and they send the bill of lading and invoice etc.
to their Bombay bank and the Bombay bank presents the same to the Bombay agents.
The Bombay agents pay for the entire lot of goods and obtain delivery of the shipping documents and then they prepare separate invoices for each of their constituents, namely, the respondents, including their own commission and split up the consignment in the sense that the draw separate delivery orders covering the respective quantity of goods ordered by each respondent and send such invoice and delivery orders to the Travancore bank, who presents the same to the respondents who receive the delivery orders against payment.
The goods are then cleared on the original bill of lading on arrival of the steamer at Travancore and thereafter the respondents take delivery of the goods from the warehouse of sellers or the Bombay agents against their respective delivery orders.
A purchase of this type cannot properly be said to occasion the import of the goods.
What really occasions the import of the goods is the order placed by the Bombay agents.
The Bombay agents not having passed the orders placed by the respondents separately to the African sellers and the African sellers not having shipped the respective quantities of goods under separate bills of lading none of the orders can be said to have occasioned the import, for in such a case there is no privity between the African sellers and the individual respondents and the import is referable only to the order placed by the Bombay agents which in the eye of the law is not the order of any of the respondents but a consolidated order placed by the Bombay agents on their own responsibility and account with the object of eventually distributing the goods amongst the different respondents in fulfilment of their respective orders.
In the next place the delivery of the bill of 116 lading covering the entire goods to the Bombay agents cannot be said to be a delivery to the respondents of the goods separately ordered by each of the respondents.
The sale in such a case takes place in Travancore on the handing over of the delivery orders to the respective respondents and the delivery of the goods thereunder from the warehouse in Travancore.
These goods, therefore, cannot claim exemption from tax under the provisions of article 286 (1) (a) or 286 (1) (b) or 286 (2).
The last type of transaction in African raw cashewnuts is where the purchase takes place after the cashew nuts arrive in Travancore port and are thereafter sold and delivered ex godown to the respondents.
This is clearly a case of intra State sale and clauses (1) (a) and (2) of the article can have no application to it.
The respondents cannot claim exemption under clause (1)(b) for reasons stated above.
As the respondents do not claim any exemption from taxation with respect to pre Constitution purchases, the same need not be discussed separately.
For reasons stated above, the decision of the High Court must be upheld only to the extent that the assessments should be quashed.
The matter must, however, go back to the Sales Tax Officer who must make a reassessment in the light of the principles laid down in the two previous cases referred to regarding clause (1) (a), the Explanation and clause (2) and in the light of the principles discussed above regarding clause (1)(b).
Agent for the appellants in all the appeals: G. H. Rajadhyaksha.
Agent for the respondents in Appeals Nos. 26 and 33: Rajinder Narain.
Agent for the respondents in Appeals Nos. 27, 30 to 32 and 34 to 36: section Subramanian.
Agent for the Union of India and the States of Madras, Hyderabad, Punjab and Mysore: G. H. Rajadhyaksha.
| Held, by (PATANJALI SASTRI C.J., MUKHERJEA, VIVIAN BOSE and GHULAM HASAN JJ.) (i) Sales and purchases which themselves occasion the export or import of the goods, as the case may be, out of, or into, the territory of India come within article 286 (1) (b) and are exempt from State taxation.
(ii) Purchases in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs barrier are not within the exemption.
(iii) Sales in the State by the exporter or importer by transfer of shipping documents while the goods are beyond the customs barrier are within the exemption, assuming that the State power of taxation extends to such transactions.
The word " course " etymologically denotes movement from one point to another and the expression " in the course of " in article 286 (1) (b) not only implies a period of time during which the movement is in progress but postulates also a connected relation.
Consequently, a sale in the course of export out of the country 54 should be understood in the context of article 286 (1) (b) as meaning a sale taking place not only during the activities directed to the end of exportation of the goods out of the country, but also as part of or connected with such activities.
But a purchase of goods for the purpose of export is only an act preparatory to their export and not an act done in the course of the export of the goods, The respondents purchased raw cashew nuts within the State of Travancore Cochin, from the neighbouring states and also imported such nuts from Africa, for the purpose of refining them and exporting them to America.
Imports from Africa were made in the following ways: (a) purchases were made through intermediaries doing business as commission agents at Bombay who acted as agents for the respondents charging commission; (b) the commission agents at Bombay indented the goods on their own account and they sold the goods as principals to the respondents.
In either case the goods were shipped direct from Africa to a port in the Travancore Cochin State.
It was found as a fact that the process of the factory was such that the goods were not the same goods commercially after refinement: Held, (i) as regards purchases made in the local markets of the State they were not exempted under article 286 (1) (b); (ii) as regards purchases made in the neighbouring States, if the purchases were effected and delivery was taken by the respondents ' servants outside the Travancore Cochin State, they would be exempt under article 286, cl.
(i) (a), and if the purchases were effected by employing firms doing commission business outside the State and deliveries were made through normal commercial channels the transactions would be of an inter State character and would fall under cl.
(2) but they would be taxable under the Sales Tax Continuance Order (No. 7 of 1950) issued by the President under cl.
(2) as such tax was being levied before the Constitution.
(iii) As regards imports from Africa, where the Bombay merchants merely acted as agents, the transactions would be purchases which occasioned the import and would be exempt under article 286 (1) (b), but where the Bombay merchants did not act as agents for the respondents, purchases from them would be on the same footing as local purchases and would not be exempt.
Per S.R. DAS J. The Explanation to article 286 (1) (a) is not an exception or a proviso but only explains cl.
(1) (a).
It does not confer taxing power on any State but only takes away the power of taxation of a State in respect of sales and purchases in which delivery does not take place within the State by enacting that such sales shall be deemed to have taken place outside that State within cl.
(1) (a).
Consequently, if a sale or purchase takes place outside a State, either under the general law or by virtue of the fiction created by the Explanation, then that State cannot, under (1) (a), tax such sale or purchase.
If a sale or purchase takes place within a State, either under the general law or by reason of the Explanation, then, if such a sale or purchase takes place 55 " in the course of " inter State trade and commerce, no State, not even the State where the sale or purchase takes place as aforesaid can tax it by reason of (2), unless and until Parliament by law provides otherwise.
A sale or purchase " in the course of " import or export within the meaning of (1) (b) includes (i) a, sale or purchase which itself occasions the import or export as already held by this court, (ii) a sale or purchase which takes place while the goods are on the high seas on their import or export journey.
and (iii) the last purchase by the exporter with a view to export and the first sale by the importer to a dealer after the arrival of the imported goods.
If a sale or purchase takes place within a State, either under the general low or by reason of the Explanation, then, if it takes place in the course of import or export as explained above, no State, not even the State within which such sale or purchase takes place can tax it by reason of (1) (b).
As regards local purchases, as those purchases took place with.
in the State they were not entitled to the protection of article 286 (1) (a), since on the findings of the High Court, the goods purchased were so altered that they cannot be deemed to be the same as the goods which were exported, and the purchases cannot be said to have been made "in the course" of export so as to be entitled to immunity from taxation under article 286 (1) (b).
As regards purchases from the neighbouring States, if the goods were taken delivery of by the agents of the respondents outside the State, such purchases must, under the Explanation, be regarded as having taken place outside the State and accordingly would be exempt from taxation under article 286 (1) (a).
If however, the goods were directly delivered to the respondents in the Travancore Cochin State the Explanation to article 286 (1) (a) will apply in view of the finding of the High Court which implies that the goods are also consumed in the State, and the neighbouring States will not be entitled to tax these sales or purchases, but the purchases are " in the course of " inter State trade and as such will be protected by (2); but as the majority of the Court have taken a different view and as such view must prevail, such purchases will become, as a result of the Explanation to (1) (a), an intra state purchase and will lose the protection of (2).
Even if such purchases fall within (2), they would be liable to be taxed under the President 's Order of 1950.
They are not protected by (1) (b) as the goods exported are different goods.
As regards purchases from Africa (1) where the Bombay merchants act as agents of the respondents and pay the price and take delivery of the shipping documents in Bombay the purchases fall within (1) (a) and also (1) (b) and are not liable to tax as they take place outside the State within (1) (a) and also "in the course of import" within (1) (b); (ii) where the African sellers ship the goods on their own initiation or on that of their agents and while the goods are on the high seas they are 56 purchased by the, respondents ' Bombay agents, the sale or purchase would be exempt under (1) (a) and under (1) (b); (iii) where the respondents place separate orders with the same commission agent at Bombay and the latter places a consolidated order with the African seller on his own responsibility and the Bombay agent after paying for the entire lot, prepares a separate invoice for each of their constituents and the latter receive the delivery orders from a Travancore bank against payment and take delivery from a Travancore warehouse the sale takes place in the Travancore Cochin State and the goods cannot claim exemption under (1) (a), (1) (b) or (2) of article 286.
|
Appeal No. 76 of 1950.
Appeal from the Judgment and Decree of the High Court of Madras dated 18th April 1945, in 895 Appeals Nos.
56 and 192 of 1941 reversing in part the decree of the Court of the Subordinate Judge of Masulipatani in Original Suit No. 29 of 1937.
B.Somayya (C. Mallikarjuna Row, with him) for the appellant.
K.Rajah Aiyar (R. Ganapathy Aiyar , with him) for Respondent No. 1.
Respondent No. 10 appeared in person.
May 18.
The Judgment of the Court was delivered by MUKHERJEA J.
The appellant before us is the sixth defendant in a suit, commenced by the plaintiff respondent in the court of the Subordinate Judge at Masulipatam (being Original Suit No. 29 of 1937) for recovery of a sum of Rs. 99,653 annas odd by enforcement of a simple mortgage bond.
The mortgage bond is dated 28th September, 1930, and it was executed by defendant No. 1 for himself and as guardian of his two minor sons defendants 2 and 3 all of whom consti tuted together a joint Hindu family at that time.
The plaintiff mortgagee happens to be the son in law of defendant No. 1 and at the time of the execution of the mortgage the first defendant was indebted to a large number of persons including the mortgagee himself, and being hard pressed by his creditors requested the plaintiff to lend him a sum of Rs. 1,25,000 on the hypothecation of the properties in suit, to enable him to tide over his difficulties and discharge his debts.
The total consideration of Rs. 1,25,000 as stated in the deed is made up of the following items : (1)Rs.
13,065, which was the amount due on a promissory note executed in favour of the plaintiff by the first defendant on the 17th January, 1928.
(2)Rs. 13,285 due under another promissory note dated 18th August, 1930 executed by defendant No.1 in favour of the wife of the plaintiff and later on transferred by her to the plaintiff on 28th September, 30.
(3)Rs.
25,000 paid by the plaintiff by endorsing in favour of defendant No. 1 a cheque for that amount 896 drawn in his name by the Co operative Central Bank, Ramchandrapuram on the Central Urban Bank, Madras.
(4) Rs. 937 8 0, the amount paid in cash by plain tiff to defendant No.1 for purchasing stamps for the mortgage document.
(5) Rs. 72,712 8 0, the amount of future advances which the plaintiff promised to make from time to time to defendant No.1 according to his convenience.
The money lent was to carry interest at 7 1/2 % simple per annum and the due date of payment of the principal money was 30th September, 1933.
The interest would, however, have to be paid annually on the 30th of September every year, in default of which the whole of the principal and interest in arrears would become repayable immediately with interest at 9% compound per annum with yearly rests.
It was expressly stated in the mortgage deed that if the mortgagee was unable to advance the entire amount of Rs. 1,25,000, the terms set out above would apply to the amount actually advanced.
It appears that after the execution of the mortgage bond a sum of Rs. 3,000 only was paid by the mortgagee to defendant No.1 on 5th of November, 1930.
In the plaint, which was filed by the plaintiff on the 15th September, 1937, the total claim was laid at Rs. 99,653 annas odd, out of which Rs. 55,287 annas odd constituted the principal money as stated above and the rest was claimed as interest calculated at the rate of 9% per annum compound with yearly rests.
Besides the original mortgagors, who were defendants Nos. 1 to 3 in the suit, there were three other persons impleaded as parties defendants.
Defendant No. 4 was the Receiver in insolvency in whom the entire estate of the defendant No. 1 vested by reason of his being adjudged a bankrupt by an order of the District Judge of Kistna dated the 18th January, 1932 in Insolvency Proceeding No. 20 of 1931, started at the instance of another creditor of the first defendant.
Defendant No. 5 was a lessee in respect of the mortgaged properties under defendant No. 4, while the sixth defendant was the purchaser of all the mortgaged 897 properties from the Receiver in insolvency.
The Receiver, it seems, had put up all the suit properties to sale subject to the mortgage on 19th April, 1937, and they were knocked down to defendant No. 6 for the price of Rs. 1,340.
A registered deed I of sale was executed by the Receiver in favour of the purchaser on 20th January, 1939.
The defendants 1 to 3 did neither appear nor contest the suit.
Defendant No. 4 appeared in person but disclaimed any interest in the suit properties.
The defendant No. 5 contended that he was a lessee under defendant No. 4 for one year only and was not a necessary party to the suit at all.
The suit was really contested by defendant No. 6, the purchaser at the Receiver 's sale.
The defence taken by defendant No. 6 in his written statement was substantially of a two fold character.
It was pleaded in the first place that the bond in suit was a collusive document not supported by any consideration and was executed by defendant No. 1 in favour of his own son in law, with a view to shield his properties from the reach of his creditors.
The other contention put forward was that the interest claimed was penal and usurious.
After the passing of the Madras Agriculturists ' Relief Act in March, 1938, this defendant filed an additional written statement, with the permission of the court, in which he raised the plea that as an agriculturist he was entitled to the reliefs provided in that Act and that the mortgage debt should be scaled down in accordance with the provisions of the same.
The trial Judge by his judgment dated the 29th July, 1940, decreed the suit in part.
It was held that the mortgage bond was not a collusive document executed with the intention of defrauding the creditors of the mortgagor; it was a genuine transaction and was supported by consideration.
On the other point, the court held that defendant No. 6 was an agriculturist and was entitled to claim the reliefs under Madras Act IV of 1938.
After deducting all outstanding interest which stood discharged under section 8(1) of the 898 Agriculturists Relief Act, the principal money due to the creditor on that date was found by the trial court to be Rs. 42,870 annas odd.
This figure was arrived at by taking only the original amounts actually advanced on the two promissory notes mentioned above and further, deducting from them, the payments made by the debtor towards the satisfaction of the principals in each.
Thus a preliminary decree was made in favour of the plaintiff entitling him to recover a sum of Rs. 42,870 4 0 together with interest at 6 1/4 per annum from 1st October, 1937, to 1st November, 1940, the date fixed for payment under the preliminary decree.
In default, the whole amount was to carry interest at 6% per annum.
It may be mentioned here that the Subordinate Judge in deciding issue No. 3 held expressly that the provision relating to payment of compound interest at an enhanced rate in default of payment of the stipulated interest on the due dates was in the nature of a penalty and should be relieved against; but as the court scaled down the interest under Madras Act IV of 1938, it became unnecessary to consider in what manner this relief should be granted under section 74 of the Indian Contract Act.
Against this decision, two appeals were taken to the High Court of Madras, one by the plaintiff and the other by defendant No. 6.
The plaintiff in his appeal (being Appeal No. 56 of 1941) assailed that part of the judgment of the Subordinate Judge which gave the defendant No. 6 relief under the Madras Agriculturists ' Relief Act; while the appeal of the sixth defendant (being Appeal No. 192 of 1941) attacked the very foundation of the mortgage decree on the ground that the mortgage being a collusive and fraudulent transaction, the plaintiffs suit should have been dismissed in toto.
The defendants 2 and 3, although they remained ex parts during the trial in the first court, filed, in forma pauperig, a memorandum of cross objection challenging the decree of the Subordinate Judge on the ground that as their interest in the mortgaged properties did not pass to the defendant No, 6 by virtue of the Receiver 's sale, their right of 899 redemption remained intact and ought to have been declared by the trial Judge.
Both these appeals as well as the cross objection were heard together by a Division Bench of the High Court and they were disposed of by one and the same judgment dated the 18th of April, 1945.
The High Court affirmed the finding of the trial Judge that the bond in suit was supported by consideration to the extent of Rs. 55,287 8 0 as alleged in the plaint and that it was a valid and bona fide transaction.
The learned Judges held, differing from the trial court, that the defendant No. 6 was not entitled to claim any relief under the provisions of the Madras Agriculturists ' Relief Act, and that in any event the court below was not right in reducing the amount of the principal money from Rs. 55,287 8 0 to Rs. 42,870, there being no renewal of a prior debt so far as defendant No. 6 was concerned.
The court agreed in holding that the provision relating to payment of enhanced interest in case of default amounted to a penalty and reduced the rate of interest from 9% compound to 71 % compound with yearly rests.
Lastly, the High Court allowed the cross objection of defendants 2 and 3, being of opinion that their interest in the mortgaged properties could not vest in the Receiver on the insolvency of their father and that the defendant No. 6 could not acquire the same by virtue of his purchase from the Receiver.
The defendants Nos. 2 and 3 were, therefore, allowed the right to redeem the mortgaged properties along with defendant No. 6.
The result was that the plaintiff was given a decree for a sum of Rs. 55,287 8 0 with interest at 7 1/2 compound with yearly rests up to the date of redemption and subsequent interest was allowed at the rate of 6% per annum.
Interest was to be calculated from 28th September, 1930, on Rs. 52,287 8 0 and.
from 5th November, 1930, on the amount of Rs. 3,000.
Against this decree, the defendant No. 6 obtained leave to appeal to the Privy Council and because of the abolition of the jurisdiction of the Privy Council, the appeal has come before us.
900 Mr. Somayya, who appeared in support of the appeal, did not press before us the contention raised on behalf Of his client in the courts below that the mortgage was a fraudulent transaction or was void for want of consi deration.
He assailed the propriety of the judgment of the High Court substantially on three points.
His first contention is, that the decision of the High Court allowing a right of redemption to defendants 2 and 3 cannot stand in view of the amendment introduced by the Provincial Insolvency Amendment Act, 1948, which has been expressly made retrospective.
The second point taken by the learned counsel is that the defendant No. 6 should have been given relief under the Madras Agriculturists ' Relief Act and the debt should have been scaled down in accordance with the provisions thereof.
It is said that the defendant No. 6 was an agriculturist himself and even if he was not, the relief under Madras Act IV of 1938 was still available to him by reason of the original mortgagors being agriculturists.
The third and the last point urged is that in any event having regard to the finding arrived at by the High Court that the stipulation to pay compound interest at an enhanced rate was a penalty, adequate relief should have been granted against it and no compound interest should have been allowed at all.
The first point raised by the learned counsel, in our opinion, is well founded and must succeed.
There was some difference of judicial opinion as to whether the powers of a father under the Mitakshara law to alienate the joint family property including the interest of his sons in the same for discharge of an antecedent debt not contracted for illegal or immoral purposes vests in the Receiver on the adjudication of the father as an insolvent.
Under the Presidency Towns Insolvency Act, this power was held to vest in the Official Assignee under section 52(2) of the Act(1).
As regards cases governed by , it was held by a Full Bench of the Madras High Court that the father 's power to dispose of his son 's interest in the joint family property for satisfaction of his untainted (1) Sat Narain vs Sri Kishen, (1936) 63 I.A. 384.
901 debts was not "property" within the meaning of section 28 (2) (d) of the Provincial Insolvency Act(1) ; while a contrary view was taken by a Full Bench of the Patna High Court (2) .
The conflict has now been set at rest by the enactment of section 28A in the Provincial Insolvency Amendment Act of 1948 which came into force on the 12th April, 1948.
The new Section reads as follows : " The property of the insolvent shall comprise and shall always be deemed to have comprised also the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency or before his discharge.
" The language of the section indicates that its operation has been expressly made retrospective.
The result, therefore, is that the power of the defendant No. 1 to alienate the interest of his sons, the defendants 2 and 3, in the mortgaged properties for satisfaction of his antecedent debts, did pass to the Receiver as "Property" within the meaning of the and consequently OD a sale by the Receiver the interest of defendants 2 and 3 did vest in the sixth defendant, and he alone must be held competent to exercise the right of redemption.
The second point urged by Mr. Soinayya raises the question as to whether the appellant could claim relief under the Madras Agriculturists ' Relief Act.
The High Court decided this point against the appellant firstly on the ground that the appellant was not a debtor at the date of the commencement of the Act, he having acquired no interest in the equity of redemption at that time.
The other reason given is that the defendant No. 6 was not an agriculturist within the meaning of the Agriculturists ' Relief Act and although he was possessed of agricultural lands and hence prima facie came within the definition of an " agriculturist " as given in section 2 (ii) of (1) Ramasastralu vs Balakrishna Rao I.L.R. (2) Viswanath vs Official Receiver, I.L.R. (1936) 16 Pat, 60 (F.B.).
902 the Act, he was excluded from the definition by the operation of proviso (D) attached to the sub section.
So far as the first ground is concerned, section 7 of the Agriculturists ' Relief Act expressly lays down that " all debts payable by an agriculturist at the commencement of this Act, shall be scaled down in accordance with the provisions of this chapter".
The essential pre requisite to the application of the provisions of the chapter, therefore is the existence of a debt payable by an agriculturist on the date when the Act commenced, that is to say, on the 22nd March, 1938.
The learned Judges of the High Court were certainly right in saying that the sixth defendant was not a debtor on that date, as he did not become the owner of the equity of redemptin till the 20th of January, 1939, when the deed of sale was executed in his favour by the Receiver in insolvency.
But this by itself is not sufficient to disentitle the appellant to the privileges of the Agriculturists ' Relief Act.
It is not necessary that the applicant for relief himself should be liable for the debt on the date that the Act came into force.
The right to claim relief as is well settled by decisions(1) of the Madras High Court is not confined to the person who originally contracted the debt, but is available to his legal representatives and assigns as well; nor is it necessary that the applicant should be personally liable for the debt.
The liability of a purchaser of the equity of redemption to pay the mortgage debt undoubtedly arises on the date of his purchase; but the debt itself which has its origin in the mortgage bond did exist from before his purchase, and if it was payable by an agriculturist at the relevant date, the purchaser could certainly claim the privileges of the Act if he himself was an agriculturist at the date of his application.
The material question, therefore, is whether the mortgage debt was payable by an agriculturist on 22nd March, 1938 ? The appellant argues that it was payable by the mortgagors and they were certainly agriculturists.
We do not think that there is warrant for any such assumption on (1) Vide Periannia vs Sellappa, I.L.R. 903 the materials as they exist on the record.
The only issue before the trial Judge was, as to whether defendant No. 6 was an agriculturist.
There was neither any question raised nor any evidence adduced as to whether defendants Nos.
I to 3 were agriculturists as well.
In fact, this aspect of the case was not adverted to by the trial Judge at all.
Before the High Court it was argued on behalf of defendant No. 6 that even if he was not an agriculturist himself, yet if the defendants 2 and 3 were given relief as agriculturists, that would enure for his benefit as well and accordingly he invited the court to go into the question and hold that the original mortgagors were agriculturists.
This the learned Judges refused to do and dismissed this part of the claim of defendant No. 6 with these remarks: "In the present case, the mortgagors have not claimed such a benefit, nor have they adduced any evidence to show that they are agriculturists.
We therefore cannot accede to the request of the sixth defendant that the right of the mortgagors to relief should be investigated merely with the object of giving an accidental relief to the non agriculturist purchaser.
" As the point was not investigated at all, it is not possible for us to hold that the debt was payable by an agriculturist on the relevant date.
It may be that the mortgaged properties were agricultural lands but it is not known whether the mortgagors did possess other estates which might bring them within the purview of any of the provisos attached to the definition.
In these circumstances, the appellant must be deemed to have failed to show that there was in existence a debt payable by an agriculturist on 22nd March, 1938.
The High Court has held further that the defendant No. 6 was not an agriculturist because he was the purchaser of certain villages at a court sale in respect of which Peishkush exceeding Rs. 500 was payable.
Consequently, he became " land holder of an estate " under the Madras Estates Land Act and could not claim to be an agriculturist as laid down in the proviso (D) to section 2 (ii) of the Act.
Mr. Somayya 904 lays stress upon the fact that this purchase on the part of his client was merely as a benamidar for defendant No. 5 as has been held by both the courts below and consequently the proviso did not affect him at all.
This is a debatable point upon which the judicial opinion of the Madras High Court itself does not seem to be quite uniform.
A distinction can certainly be drawn between the rights of a person in his own individual or personal capacity and those which he exercises on behalf of another.
On the other hand, if we look to the definition of " land holder " as given in section 3 (5) of the Madras Estates Land Act, it may be argued that a benamidar of an estate, who is entitled to collect rents and is at least the titular owner of the estate could come within the description.
Having regard to the view taken by us that section 7 of the Agriculturists ' Relief Act is not applicable on the facts of the present case, this question does not really become material and it is not necessary for us to express any final opinion upon it.
For the identical reason section 8 (1) of the Act cannot also be invoked in favour of the appellant.
It may further be mentioned that Mr. Somayya in course of his arguments made it plain that he would not press for relief under the Agriculturists ' Relief Act if the high rate of in terest allowed by the High Court was substantially reduced.
This takes us to the third point and we think that the stipulation as to payment of compound interest in case of default, being held to be a penalty by both the courts below, the High Court should not have allowed interest at the rate of 71 % compound with yearly rests, The High Court seems to have been misled by a statement occurring in the judgment of the trial Judge that the original rate of interest was 7 1/2% compound with yearly rests.
This is not true and as a matter of fact, the original agreement was to pay interest at 7 1/2 % simple.
We consider it proper that the mortgage money payable to the plaintiff should carry interest at the rate of 7 1/2% simple up to the expiry of the period of redemption which we fix at six months from this date, 905 The result, therefore, is that we allow the appeal in part and modify the judgment of the High Court.
A preliminary decree should be drawn up in favour of the plaintiff against defendant No. 6 alone for a sum of Rs. 55,287 annas odd which will carry interest at 7 1/2 % simple per annum.
Interest will be calculated on Rs. 52,287 on and from the date of the mortgage, while on the balance of Rs. 3,000 interest will run from 5th November, 1930.
We make no order as to costs of this court or of the High Court.
The plaintiff will have his costs of the trial court.
Appeal allowed in part.
Agent for respondent No. 1 : Ganpat Rai.
| Under the provisions of section 28A of the , as amended by the Provincial Insolvency (Amendment) Act of 1948, which has been expressly made retrospective, when a Hindu father governed by the Mitakshara law is adjudged a bankrupt, his power to alienate the interest of his sons in the joint family properties for the satisfaction of his antecedent debts not contracted for illegal or immoral purposes, passes to the Receiver as his "property" within the meaning of the Act.
Consequently, where a Hindu father who has mortgaged the joint family property for an antecedent debt which is not illegal or immoral becomes insolvent and the receiver sells the property, the interest of his sons in the property also vests in the purchaser, even in the case of a sale held before the Amendment Act of 1948 came into force, and the sons cannot redeem the property.
Sat Narain vs Sri Kishen (63 I.A. 384), Rama Sastrulu vs Balakrishna Rao (I. L. R. 1943 Mad. 83) and Viswanath vs Official Receiver (I.L.R. 16 Pat.
60) referred to.
Though the liability of a person who has purchased an equity of redemption after 22nd March, 1938, to pay the mortgage debt arises only on the date of his purchase, if the debt itself existed on the 22nd March, 1938, and if it was payable by an agriculturist on that date, the purchaser can claim the benefits conferred by section 7 of the Madras Agricultural Relief Act, 1938, if he himself was an agriculturist on the date of his application.
Periannia vs Sellappa (I.L.R. 1939 218) referred to.
|
on No. 29 of 1953.
Petition under article 32 of the Constitution of India praying that the Court of Wards, Ajmer, be ordered to forbear from carrying on the superintendence of the istimrari estate and other properties of the petitioner and for restoration of possession and management of the said estate and properties.
J.B. Dadachanji and H. C. Sogain for the appellant.
M.C. Setalvad, A ttorney General for India, (Bhava Datta Sharma, with him) for the respondents.
May 15.
The Judgment of the Court was delivered by MAHAJAN J.
This is a petition under article 32 of the Constitution seeking relief against alleged infringement of certain fundamental rights of the petitioner and arises in these circumstances.
The petitioner owns an " istimrari estate" in the State of Ajmer under an istimrari sanad granted to his ancestor in the year 1875.
He enjoys therein a life interest with an obligation to perform certain duties as prescribed by the Ajmer Land and Revenue Regulation (11 of 1877).
The Deputy Commissioner of Ajmer, who is the Court of Wards constituted under the Ajmer Government Wards Regulation (I of 1888), took over possession and assumed superintendence of the said estate on the 18th September, 1952, purporting to act under sections 6 and 7 of the Regulation read with section 112 of the Ajmer Tenancy and Land Records Act, 1950 (XLII of 1950), and hence this petition for a writ of mandamus or one in the nature thereof, or for the issue 1051 of a direction to the Court of Wards for restoration of possession of the estate and for an order directing it to forbear from carrying on the superintendence of the estate.
The order made by the Court of Wards on the 18th September, 1952, is impugned as being void and of no effect whatever, because it is alleged that the statutory provisions under which it is purported to have been made contravene the provisions of Part III of the Constitution and take away and abridge the petitioner 's rights guaranteed by article 19 (1) (f) of the Constitution.
Section 112 of Act XLII of 1950 is one of a group of 7 sections in Chapter X of the Act which deals with the subject of " Compensation and Penalties ".
The section prescribes penalties for habitual infringement of rights of tenants and reads thus: " If a landlord habitually infringes the rights of a tenant under this Act, he shall, notwithstanding anything in section 7 of the Ajmer Government Wards Regulation, 1888 (I of 1888), be deemed to be a "landlord who is disqualified to manage his own property " within the meaning of section 6 of the said Regulation and his property shall be liable to be taken under the superintendence of the Court of Wards ".
The preceding section 110 is in these terms: "If a landholder or his agent collects from a tenant any lag or neg, he shall be deemed to have committed an offence of extortion within the meaning of the Indian Penal Code (Act XLV of 186O) Just as section II 0 declares an illegal exaction by a landlord to be an offence under the Indian Penal Code, in like manner, section 112 declares a landlord who habitually infringes the rights of a tenant " a person disqualified to manage his own property " within the meaning of section 6 of Regulation I of 1888, the consequence being that his property becomes liable to be taken over by the Court of Wards.
The section is an ingenious and novel device to punish landlords who habitually infringe the rights of tenants.
It authorizes 1052 the use for punitive purposes of the machinery of Regulation I of 1888 enacted to make better provision for the superintendence of Government Wards in AjmerMerwara.
By force of the declaration in section 112 of the Act, landlords who habitually infringe the rights of the tenants fall within the category of persons incapable of managing their own property and come within the ambit of section 6 of the Regulation, which is in these terms: ,, The Court of Wards may, with the previous sanction of the Chief Commissioner, assume the superintendence of the property of any landholder who is disqualified to manage his own property ".
The result therefore of the combined operation of sec tion 112 of Act XLII of 1950 and of the provisions of Regulation I of 1888, is that the Court of Wards can in its own discretion and on its subjective determination, assume the superintendence of the property of a landlord who habitually infringes the rights of his tenants.
The condition precedent to such assumption of superintendence is the previous sanction of the Chief Commissioner, the giving of which is also a matter entirely resting on his discretion.
Section 27 of Regulation I of 1888 provides that " the exercise of any discretion conferred on the Court of Wards or the Chief Commissioner by this Regulation shall not be called in question in any civil court ".
It was conceded by the learned Attorney General appearing for the State of Ajmere that there was nothing in the contents of either Act XLII of 1950 or Regulation I of 1888 which provided a machinery for determining the question whether a certain landlord was a person who was habitually infringing the rights of his tenants.
Under Regulation I of 1888, the assumption by the Court of Wards of the superintendence of the property of a disqualified proprietor depends merely on the subjective determination of the Deputy Commissioner or the Commissioner or of the Chief Commissioner, and the exercise of this discretion cannot be questioned in any manner in a civil court.
Act XLII of 1950 says nothing whatsoever on this subject.
1053 The contention that the provisions of section 112 of Act XLII of 1950 read with the provisions of Regulation I of 1888 infringe the fundamental right of the petitioner guaranteed by article 19 (1) (f) of the Constitution, is, in our opinion, well founded and does not require any elaborate discussion.
The petitioner 's right to hold the istimrari estate and his power of disposal over it stand abridged by the act of the Court of Wards authorized by these provisions.
His right to manage the estate and enjoy possession thereof stands suspended indefinitely and until the time that the Court of Wards chooses to withdraw its superintendence of the property of the petitioner.
During this period, he can only receive such sums of money for his expenses as the Court of Wards decides in its discretion to allow.
Thus, the provisions of section 112 of Act XLII of 1950 clearly abridge the fundamental right of the petitioner under article 19 (1) (f) and are to that extent void.
The learned Attorney General canvassed for the validity of the provisions of section 112 on three grounds.
He contended that the determination of the question whether a certain landholder was a person who habitually infringed the rights of his tenants did not depend on the opinion of the Court of Wards, but was a matter that could be agitated and canvassed in a civil court.
It was said that there were no words in the section from which it could be inferred that the determination of this fact depended on the subjective determination of the Court of Wards.
It was emphasized that the section had not used the familiar language "in its opinion" or words like that, which are usually employed to indicate whether a matter depends on the subjective determination of an authority or whether it can be agitated in a civil court.
This contention, in our opinion, is not well founded.
As already pointed out, Act XLII of 1950 has prescribed no machinery for the determination of the question whether a landlord is guilty of habitually infringing the rights of his tenants, and rightly so, because section II 2 of the Act is merely of a declaratory character and 1054 declares such a landlord as being under a disability and suffering from an infirmity.
This declaration becomes operative and effective only when the Court of Wards in its discretion decides to assume superintendence of the property of such a proprietor.
In other words, when the Deputy Commissioner or the Commissioner or the Chief Commissioner is of the opinion that such a proprietor should be deprived of possession of his property, this determination then operates to the prejudice of the landlord, but he cannot challenge the exercise of the discretion by these officers in view of the provisions of section 27 of Regulation I of 1888.
The result then is that by the subjective determination of the Court of Wards, both the questions whether a particular person habitually infringes the rights of his tenants and whether his property should be taken over by the Court of Wards, stand settled and the landlord cannot have recourse to a civil court on these questions.
The learned Attorney General was not able to draw our attention to any provision in the Court of Wards Act or in Act XLII of 1950 which enabled the landlord, held to be a habitual infringer of the rights of his tenants, to have recourse to a civil court to test the correctness of the determination made by the Court of Wards.
The provisions of Regulation of 1888 clearly indicate the contrary.
Next, it was argued that the provisions of section 112 amount to reasonable restrictions on the exercise of the right conferred by article 19 (1) (f) of the Constitution on a citizen, and these restrictions are in the interests of the general public.
In our judgment, this.
argument also is not sound.
As indicated above, the provisions of section 112 of Act XLII of 1950 are penal in nature and are intended by way of punishment of a landlord who habitually infringes the rights of his tenants.
He is punished by being placed at the mercy of the Court of Wards and by being made subject to the stringent provisions of Regulation I of 1888.
An enactment which prescribes a punishment or penalty for bad behaviour or for misconduct of a landlord cannot possibly be regarded as restriction on a fundamental 1055 right.
Indeed, a punishment is not a restriction.
This was frankly conceded by the learned Attorney General.
It is still more difficult to regard such a provision as a reasonable restriction on the fundamental right.
When a law deprives a person of possession of his property for an indefinite period of time merely on the subjective determination of an executive officer, such a law can, on no construction of the word "reasonable" be described as coming within that expression, because it completely negatives the fundamental right by making its enjoyment depend on the mere pleasure and discretion of the executive, the citizen affected having no right to have recourse for establishing the contrary in a civil court.
Section 112 of Act XLII of 1950 cannot therefore be held valid as coming within the scope of article 19 (5) of the Constitution.
Lastly, it was contended by the learned AttorneyGeneral that section 112 was valid by reason of the curative provisions of article 31 A of the Constitution.
That article validates laws which would otherwise contravene the fundamental right in article 31(2) of the Constitution, but its operation is restricted to laws providing for acquisition of estates etc.
It runs as follows: " Notwithstanding anything in the foregoing provi sions of this Part, no law providing for the acquisition by the State of any estate or of any rights therein or for 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 conferred by any provisions of this Part. .
Section II 2 of Act XLII of 1950, intended to regulate the rights of landlords and tenants, is obviously not a law providing for " the acquisition by the State " of the estates of the landlords, or of any rights in those estates.
It is also not a law providing for the extinguishment or modification of any such rights.
The learned Attorney General laid emphasis on the word modification " used in article 31 A, That word in 1056 the context of the article only means a modification of the proprietary right of a citizen like an extinguishment of that right and can not include within its ambit a mere suspension of the right of management of estate for a time, definite or indefinite.
Historically speaking, article 31 A which has relation to article 31(2) of the Constitution, has no relevancy whatsoever to the law enacted in section 112 of the Act XLII of 1950.
For the reasons given above, we are of the opinion that the law enacted in section 112 of Act XLII of 1950 is not saved either by clause (5) of article 19 or by article 31 A of the Constitution.
It manifestly infringes the fundamental right of the petitioner guaranteed by article 19 (1) (f) of the Constitution.
That being so, the petitioner is entitled to a direction that possession of his estate be restored to him.
We accordingly direct the Court of Wards, Ajmer Merwara, constituted under the Ajmer Government Wards Regulation, I of 1888, to forbear from carrying on superin tendence of the petitioner 's istimrari estate and the other properties taken possession of, and to restore their possession to the petitioner.
The petitioner will have the costs of this petition.
Petition allowed.
Agent for the petitioner : I. N. Shroff.
| Section 112 of the Ajmer Tenancy and Land Records Act (XLII of 1.950) provided that "if a landlord habitually infringes the rights of a tenant under this Act, he shall, notwithstanding any thing in section 7 of the Ajmer Government Wards Regulation, 1888 (I of 1888) be deemed to be a 'landlord who is disqualified to manage his own property ' within the meaning of section 6 of the said Regulation and his property shall be liable to be taken under the superintendence of the Court of Wards.
" Section 6 of Regulation I of 1888 provided that the Court of Wards may, with the previous sanction of the Chief Commissioner, assume the superintendence of the property of any landholder who is disqualified to manage his property.
The petitioner, whose estate was taken over by the Court of Wards under the above mentioned provisions of law, applied for relief under article 32 of the Constitution for restoration of his estate and other appropriate reliefs: Held, (1) that the result of the combined operation of section 112 of Act XLII of 1950 and the provisions of sections 6 and 7 of Regulation I of 1888 was that the Court of Wards could in its own discretion and on its subjective determination assume the superintendence of the property of a landlord who habitually infringed the rights of his tenants, and the exercise of the discretion of the Court of Wards cannot be questioned in a civil court; section 112 of Act XLII of 1950 read with the provisions of Regulation I of 1888 therefore infringed the fundamental rights of the petitioner guaranteed by article 19 (1) of the Constitution and was to that extent void; (ii) the provisions of section 112 cannot be regarded as a " reasonable" restriction imposed in the interests of the general public on the exercise of the right conferred by article 19 (1) (f), because they completely negatived the right by making its enjoyment depend on the mere discretion of the executive; 136 1050 (iii)that section 112 was not validated by article 31 A of the Constitution as it was not "a law providing for the acquisition by the State of any estate or of any rights therein or for the extinction or modification of any such rights" within the meaning of article 31 A.
The word "modification" in the context of article 31 A only means a modfication of the proprietary right of a citizen like an extinguishment of that right and cannot include within its ambit a mere suspension of the right of management of the estate for a time, definite or indefinite.
|
Appeal No. 75 of 1952.
Appeal from the Judgment and Order dated the 16th January, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) in Income tax Reference No. 46 of 1950.
C. K. Daphtary, Solicitor General for India (G. N. Joshi with hum) for the appellant Joshi with him N. C. Chatterjee (P. K. Sen Gupta, with him) for the respondent.
April 17.
The Judgment of the Court was delivered by PATANJALI SASTRI C.J.
This is an appeal from a judgment of the High Court of Judicature at Calcutta answering a reference under section 66 A of the Indian Income tax Act, 1922 (hereinafter referred to as the Act) in favour of the respondent herein.
The respondent carries on business as selling agents of the Bengal Potteries Ltd., and he was prosecuted under section 13 of the Hoarding, and Profiteering Ordinance, 1943, (Ordinance No. XXXV of 1943) on a charge of selling goods at prices higher than were reasonable in contravention of the provisions of section 6 thereof.
It appears that, before the prosecution was launched in August, 1944, respondent 's business premises were searched and a part of his stock was seized and taken away.
The respondent defended the case, spending a sum of Rs. 10,895, and the prosecution ended in an acquittal on February 16, 1945.
In his assessment to income tax for the year 1945 46, the respondent claimed the deduction of the Said sum of Rs. 10,895 from the profits of his business under section 10(2) (xv) of the Act.
The Income tax Officer 93 716 disallowed the claim but the Appellate Assistant Com missioner allowed it, and his decision was confirmed by the Income tax Appellate Tribunal, Calcutta Bench.
Thereupon, the Commissioner of Income tax, West Bengal, applied to the Tribunal to state a case for decision by the High Court under section 66 A of the Act, and the Tribunal accordingly referred the following question to that Court for its decision Whether in the circumstances of this case the Tribunal was right in holding that the sum of Rs. 10,895 spent in defending the criminal,proceeding was an expenditure laid out or expended wholly and exclusively for the 'purpose of business as contemplated by section 10(2) (xv) of the Indian Income tax Act ? In dismissing the appeal preferred by the Income tax Officer, the Tribunal observed: "It may be stated straight off that it has not been established by any material that the conviction in cases like this may end in imprisonment.
The question that personal liberty was likely to be jeopardised therefore will not be considered by us. . .
In any case, in the absence of any material in this particular case that personal liberty was likely to be jeopardised, all that we can say is that there was a chance of conviction in which the respondent might have been fined.
No doubt, the element of saving himself from the fine, if any, might be there, but it is so inextricably mixed up with the main purpose for the defence that we are prepared to ignore that little element.
In our opinion, the defence was solely for the purpose of maintaining his name as a good businessman and also to save his stock from being undersold if the Court held that the prices charged by the respondent were unreasonable.
" In the order made on the reference Harries C. J. (with whom Banerjee J. concurred) remarked: "In every criminal prosecution where the matter is defended to protect the good name of a business or a professional man, the fear of possible fine or 717 imprisonment must always be there.
But the Tribunal have pointed out that this was so inextricably mixed up with the protection of the good name of the business that it can well be found that the money ' spent in defence in the criminal prosecution wag spent solely and exclusively for the purpose of the business.
The finding is a finding of fact and is binding upon us." The learned Judges proceeded to refer to a ruling of the Bombay High Court J. B. Advani vs Commissioner of Income tax(1) and held that the respondent satisfied both the tests laid down there as applicable in such cases : He was charged with regard to a transaction which took place in the ordinary course of business and he was charged in his capacity as a trader.
"If these two tests were satisfied and the Court came to the conclusion that the primary object of incurring the expenditure was to protect the good name of business, then it could be said that the expenditure was wholly and exclusively for the purposes of the business".
The learned Judges accordingly answered the question referred to them in the affirmative.
They, however, granted a certificate under section 66 A (2) of the Act that the case is a fit one for appeal to this Court.
We are unable to agree that the finding of the Tribunal, to which reference has been made, is binding on the Court as a finding of fact and is decisive of the reference.
The finding of the Tribunal is vitiated by its refusal to consider the possibility of the criminal proceeding terminating in the conviction and imprisonment of the respondent.
As has been stated, the respondent was prosecuted under section 13 which provides: "Whoever contravenes the provisions of this Ordinance shall be punishable with imprisonment for a term which may extend to five years or with fine or with both.
" The respondent was charged with contravention of section 6, which by sub sec tion (1) prohibits the sale by a dealer or producer of an article for a consideration which is unreasonable (1) [1950] is I.T.R. 557.
718 and sub Section (2) defines "unreasonable consideration".
The framers of the Ordinance thus appear to have regarded the offence as one calling for a deterrent punishment in view of its antisocial character, and it is idle to suggest that it is for the Income tax authorities to prove in such cases that the conviction might result in a sentence of imprisonment and that$ in the absence of such proof, there was, at the most, only a chance of conviction and fine.
We cannot appreciate the remark that "even this chance of con viction and fine was so inextricably mixed up with the main purpose of the defence that it could, be ignored.
" A finding arrived at on this line of reasoning is obviously vitiated by a serious misapprehension regarding the risk involved in a prosecution under the Ordinance and it cannot be regarded as binding on the Court in dealing with the reference.
If, as the High Court realised, in every criminal prosecution where the matter is defended to protect the good name of a business or a professional man, the fear of possible fine or imprisonment must always be there, it must ordinarily be difficult for any Court to say, that the expenses incurred for the defence, even if they are not to be regarded as the "personal expenses" of the person accused, constituted "expenditure laid out or expended wholly and exclusively for the purposes of the business".
Learned counsel for the respondent frankly admitted that he was not able to find a single case in the books where the expenses incurred by, a person exercising a trade or profession in defending a criminal prosecution, which arises out of his business or professional activities, were allowed to be deducted in the assessment of his profits or gains for income tax purposes.
Reference was made in the course of argument to numerous cases where legal expenses incurred in civil litigation, arising out, of matters incidental to the carrying on of a business, were allowed as, a deduction in the computation of its profits, e.g.Commissioner of Income tax vs Maharajadhiraj of Darbhanga(1), where (1) (1942) L.R. 69 I.A. 15.
719 the Privy Council held that law charges incurred in defending an action brought against a money lender for damages for conspiracy, misrepresentation and breach of contract to advance sufficient funds to finance e a company were allowable as business expenditure.
In that class of case, no question could arise as to the primary or secondary purpose for which the legal expenses could be said to have been incurred as in the case of a criminal prosecution where the defence cannot easily be dissociated from the purpose of saving the accused person from a possible conviction and imposition of the prescribed penalty.
Nor are we satisfied, as at present advised, that a distinction drawn in the Bombay case(1) between the legal expenses of a successful and unsuccessful defence is sound.
The deductibility of such expenses under, section 10(2) (xv) must depend on the nature and purpose of the legal proceeding in relation to the business whose profits are under computation, and cannot be affected by the final outcome of that proceeding.
Income tax assessments have to be made for every year and cannot be held up until the final result of a legal proceeding, which may pass through several courts, is announced.
For the reasons indicated we allow the appeal and answer the question referred in the negative.
The appellant will be entitled to his costs both here and in the Court below.
Appeal allowed.
| The respondent who carried on business was prosecuted under section 13 of the Hoarding and Profiteering Ordinance of 1943 on a charge of selling goods at an unreasonable price.
He was finally acquitted and claimed in his assessment for a subsequent year that the sum of Rs. 10,895 which he had spent in defending himself against the charge should be deducted from his income under section 10(2)(xv) of the Income tax Act as "expenditure laid out or expended wholly and exclusively for purposes of the business".
The Appellate Tribunal held that in the absence of any evidence that personal liberty was likely to be jeopardised there was only a chance of his being fined, that the object of saving himself from fine was so inextricably mixed with the main purpose of the defence which was solely for the purpose of maintaining the respondent 's name as a good businessman and also to save his stock from being undersold, that it could be ignored, and that, therefore, the claim was allowable under section 10(2)(xv).
On a reference the High Court held that the finding of the Tribunal was one of fact and was binding on it.
On further appeal: Held (i) that the finding of the Tribunal was not one of fact and was not decisive of the reference; (ii) the finding of the Tribunal was vitiated by its refusal to consider the possibility of the prosecution ending in a sentence of imprisonment and throwing on the Income tax authorities the burden to prove that the prosecution might result in his imprisonment; and the finding was not therefore binding on the Court; (iii) in any event, the expenses could not be said to be " expenditure laid out or expended wholly and exclusively for the purposes of the business" within section 10(2)(xv) of the Act.
Legal expenses incurred in civil litigation &rising out of matters incidental to the carrying on of a business stand on a different footing as in such a case no question could arise as to the primary or secondary purpose for which the expenses could be said to have been incurred.
The deductibility of such expenses under section lO (2) (xv) must depend on the nature and purpose of the legal proceeding and not 715 on the final outcome of it and a distinction cannot therefore be drawn between expenses of a successful and unsuccessful defence for purposes of section 10 (2) (xv).
J. B. Advani vs Commissioner of Income tax ([1950] referred to.
Commissioner of Income tax vs Maharajadhiraj of Darbhanga ([1942] L. R. 69 I.A. 15) distinguished.
|
minal Appeal No. 24 of 1951.
Appeal by special leave granted by the Supreme Court on the 2nd April, 1951, from the Judgment and Order dated the 5th May, 1950, of the High Court of Judicature at Allahabad in Criminal Miscellaneous Case No. 34 of 1949.
M. C. Setalvad, Attorney General for India, K. section Krishnaswamy Aiyangar and section P.Sinha (V. N. Sethi, K. B. Asthana, N. C. Sen, K. N. Aggarwala, Shaukat Hussain, K. P. Gupta, M. D. Upadhyaya and G. C. Mathur, with them) for the appellants.
Gopalji Mehrotra and Jagdish Chandra for the respondent.
May 8.
The Judgment of the Court was delivered by MUKHERJEA, J.
This appeal which has come before us, on special leave, is directed against a judgment of a Full Bench of the Allahabad High Court, dated 5th May, 1950, by which the learned judges held the appellants guilty of contempt of court; and although the apology tendered by the appellants was accepted, they were directed to pay the costs of the respondent State.
The appellants, six in number, are members of the Executive Committee of the District Bar Association at Muzaffarnagar within the State of Uttar Pradesh, and the contempt proceedings were started against them, because of certain resolutions passed by the Committee on 20th April, 1949, copies of which were forwarded to the District Magistrate and other officers by a covering letter signed by appellant No.1 as President of the Bar Association.
To appreciate the contentions that have been raised in this appeal, it would be necessary to state a few relevant facts.
The resolutions which form the basis of the contempt proceedings relate to the conduct of two judicial officers, both of whom functioned At 1172 Muzafarnagarn at the relevant time.
One of them named Kanhaya Lal Mehra was a Judicial Magistrate while the other named Lalta Prasad was a Revenue Officer.
It is said that the first appellant as President of the Bar Association received numerous complaints regarding the way in which these officers diposed of cases in their courts and behaved towards the lawyers and the litigant public.
The Executive Committee of the Association took the matter in hand and, after satisfying themselves that the complaints were legiti mate and well founded, they held a meeting on 20th April, 1949, in which the following resolutions were passed: Rsolved that "Whereas the members of the Association have had ample opportunity of forming an opinion of the judicial work of Sri Kanhaya Lal, Judicial Magistrate, and Shri Lalta Prasad, Revenue Officer, It is now their considered opinion that the two officers are thoroughly incompetent in law, do not inspire confidence in their judicial work, are given to stating wrong facts when passing orders and are overbearing and discourteous to the litigant public and the lawyers alike.
Besides the above mentioned defects common to both of them, other defects are separately catalogued as hereunder: * * * * (The complaints against each of the officers separately were then set out under specific heads).
Resolved further that copies of the resolution be sent to the Honourable Premier, the Chief Secretary of the Uttar Pradesh Government, the Commissioner and the District Magistrate for suitable action; Resolved that the District Magistrate and Collector be requested to meet a deputation of the following in this connection at an early date;" (The names of 5 members who were to form the deputation were then mentioned.
) 1173 It is not disputed that this meeting of the Executive Committee of the Bar Association was held in camera and no non member was allowed to be present ' at it.
The resolutions were typed out by the President himself and the proceedings were not recorded in the Minute Book of the Association at all.
On the following day, that is, on 21st April, 1949, the President sent a copy of the resolutions with a covering letter marked " confidential" to the District Magistrate, Muzaffarnagar.
Copies of the resolutions were similarly despatched to the Commissioner of the Division, the Chief Secretary and the Premier of Uttar Pradesh.
It is not disputed that the District Magistrate was the immediate superior of the officers concerned, and the other three were the higher executive authorities in the official hierarchy.
One paragraph of this covering letter contained the following statement: "Complaints against these officers had been mounting and a stage was reached when the matter had to be taken up formally.
The resolution is not only well considered and unanimous but represents a consensus of opinion of all practitioners in the Criminal and Revenue side.
" The post script of the letter addressed to the District Magistrate contained a prayer that he might find it convenient to fix an early date to meet the deputation of 5 members as indicated in the third resolution.
The Divisional Commissioner, by his letter dated 27th April, 1949, addressed to appellant No. 1, acknowledged receipt of the copy of the resolutions and requested the addressee to supply specific details of cases tried by these officers in support of the allegations contained in the resolution.
Without waiting for this information, however, the Commissioner on the day following wrote a letter to the Chief Secretary of the U.P. Government suggesting that the matter should be brought to the notice of the High Court inasmuch as instances were not rare where influential members of the Bar got resolutions like these passed by their associations with a view to put 152 1174 extra judicial pressure upon the judicial officers so ,as to make them amenable to their wishes which often were questionable.
On 10th May, 1949, a deputation of 5 members waited upon the District Magistrate and discussed with the latter the entire situation.
The Magistrate also told the deputation that the details of complaints as required by the Commissioner should be furnished at an early date.
These details were sent to the District Magistrate by the appellant No. I on 20th June, 1949, and specific instances were cited, the accuracy of which was vouched by a number of senior lawyers who actually conducted those cases.
On 20th July, 1949, the District Magistrate through the Divisional Commissioner wrote a letter to the Registrar of the High Court of Allahabad requesting the latter to draw the attention of the High Court to the resolutions passed on 20th April, 1949, and other remarks made by the members of the Committee and suggesting that suitable action might be taken against them under section 3 of the Contempt of Courts Act of 1926.
On 16th November, 1949, the High Court directed the issue of notices on 8 members of the Committee to show cause why they should not be dealt with for contempt of court in respect of certain portions of the resolution which were set out in the notice.
In answer to these notices, the opposite parties appeared and filed affidavits.
The case was heard by a Bench of three Judges who, by their judgment dated 5th May, 1950, came to the conclusion that with the exception of two of the opposite parties who were not members of the Executive Committee at the relevant date, the remaining six were guilty of contempt of ' court.
It was held that the opposite parties were not actuated by any personal or improper motives; the statement made on their behalf that their object was not to interfere with but to improve the administration of justice was accepted by the court, but nevertheless it was observed that the terms used in the resolution were little removed from personal abuse and whatever might have been the motive, they clearly were likely to bring the Magistrate into contempt and 1175 lower their authority.
The concluding portion of the judgment stands as follows: "We think that the opposite parties acted under a misapprehension as to the position, but they have expressed their regrets and tendered an unqualified apology.
In the circumstances, we accept their apology, but we direct that they pay the costs of the Government Advocate which we assess at Rs. 300.
" It is the propriety of this judgment that has been assailed before us in this appeal.
According to the learned judges of the High Court,, the allegations made against the judicial officers in the present case come within the category of contempt which is comniitted by "scandalising the court".
The learned judges observed on authority of the pronouncement of Lord Russell in Reg.
vs Gray(1), that this class of contempt is subject to one important qualification.
The judges and courts are alike open to criticism and if reasonable argument or expostulation is offered against any judicial act as contrary to law or the public good, no court could treat that as contempt of court.
In the opinion of the learned judges, the complaint lodged by the appellants exceeded the bounds of fair and legitimate criticism and in this respect the members of the Bar Association could not claim any higher privilege than ordinary citizens.
No distinction, the High Court held, could also be made by reason of the fact that the charges against the judicial officers in the present case were embodied in a representation made to authorities who were the official superiors of the officers concerned and under whose administrative control the latter acted.
The learned Attorney General who appeared in sup.
port of the appeal, characterised this way of approach of the High Court as entirely wrong.
His contention is that any act or publication which is calculated to lower the authority or dignity of a judge does not per se amount to contempt of court.
The test is whether the allegations are of such character or are made in (1) 1176 such circumstances as would tend to obstruct or interfere with the course of justice or the due administration of law.
Reliance was placed by him in this connection upon certain pronouncements of the Judicial Committee which held definitely that an imputation affecting the character or conduct of a judge, even I though it could be the subject matter of a libel proceeding, would not necessarily amount to a contempt of court.
The Attorney General laid very great stress on the fact that the resolutions passed and the representations made by the appellants in the present case were not for the purpose of exposing before the public the alleged shortcomings of the officers concerned ; the whole object was to have the grievances of the lawyers and the litigating public which were genuinely felt, removed by an appeal to the authorities who alone were competent to remove them.
Such conduct, it is argued, cannot in any way be calculated to interfere with the due administration of law and cannot be held to be contempt of court.
The points raised are undoubtedly important and require to be examined carefully.
It admits of no dispute that the summary jurisdiction exercised by superior courts in punishing contempt of their authority exists for the purpose of preventing interference with the course of justice and for maintaining the authority of law as is administered in the courts.
It would be only repeating what has been said so often by various judges that the object of contempt proceedings is not to afford protection to judges, personally from imputations to which they may be exposed as individuals; it is intended to be a protection to the public whose interests would be very much affected if by the act or conduct of any party, the authority of the court is lowered and the sense of confidence which people have in the administration of justice by it is weakened.
There are indeed innumerable ways by which attempts can be made to hinder obstruct the due administration of justice in courts.
One type of such 1177 interference is found in cases where there is an act or, publication which "amounts to scandalising the court itself" an expression which is familiar to English lawyers since the days of Lord Hardwick(1).
This scandalising might manifest itself in various ways but, in substance, it is an attack on individual judges or the court as a whole with or without reference to particular cases, casting unwarranted and defamatory aspersions upon the character or ability of the judges.
Such conduct, is punished as contempt for this reason that it tends to create distrust in the popular mind and impair the confidence of the people in the courts which are of prime importance to the litigants in the protection of their rights and liberties.
There are decisions of English courts from early times where the courts assumed jurisdiction in taking committal proceedings against persons who were guilty of publishing any scandalous matter in respect of the court itself.
In the year 1899, Lord Morris in delivering the judgment of the Judicial Committee in MacLeod vs St. Aubin(2) observed that "committals for contempt by scandalising the court itself have become obsolete in this country.
Courts are satisfied to leave to public opinion attacks or comments derogatory or scandalous to them.
" His Lordship said further: "The power summarily to commit for contempt is considered necessary for the proper administration of justice.
It is not to be used for the vindication of a judge as a person.
He must resort to action for libel or criminal information.
" The observation of Lord Morris that contempt proceedings for scandalising the courts have become obsolete in England is not, strictly speaking, correct; for, in the very next year, such proceedings were taken in Reg.
vs Gray(1).
In that case, there was a scandalous attack of a rather atrocious type on Darling J. who was sitting at that time in Birmingham Assizes and was trying a man named Wells who was indicted intter alia for selling and publishing obscene literature.
(1) Vide In re Read and Huggonoson ; , 471.
(2) (3) (1900] 2 Q.B. 36.
1178 The judge, in the course of the trial, gave a warning ,to the newspaper press that in reporting the proceedings of the court, it was not proper for them to give publicity to indecent matters that were revealed during trial.
Upon this, the defendant published an article 'in the Birmingham Daily Argus, under the heading "An advocate of Decency", where Darling J. was abused in scurrilous language.
The case of Wells was then over but the Assizes were still sitting.
There can be no doubt that the publication amounted to contempt of court and such attack was calculated to interfere directly with proper administration of justice.
Lord Russell in the course of his judgment, however, took care to observe that the summary jurisdiction by way of contempt proceedings in such cases where the court itself was attacked has to be exercised with scrupulous care and only 'when the case is clear and beyond reasonable doubt. "Because", as his Lordship said, "if it is not a case beyond reasonable doubt, the court should and ought to leave the Attorney General to proceed by criminal information".
In 1943, Lord Atkin, while delivering the judgment of the Privy Council in Devi Prashad vs King Emperor(1), observed that cases of contempt, which consist of scandalising the court itself, are fortunately rare and require to be treated with much discretion.
Proceedings for this species of contempt should be used sparingly and always with reference to the administration of justice.
"If a judge is defamed in such a way as not to affect the administration of justice, he has the ordinary remedies for defamation if he should feel impelled to use them.
" It seems, therefore, that there are two primary con siderations which should weigh with the court when it is called upon to exercise the summary powers in cases of contempt committed by "scandalising" the court itself.
In the first place, the rejection on the conduct or character of a judge in reference to the discharge of his judicial duties would not be contempt if such reflection is made in the exercise of the right of fair and reasonable criticism which every citizen possesses in (1) 70 1, A. 216.
1179 respect of public acts done in the seat of justice.
It is not by stifling criticism that confidence in courts can be created.
"The path of criticism", said Lord Atkin(1), "is a public way.
The wrong headed are permitted to err therein; provided that members of the public abstain, from imputing motives to those taking part in the administration of justice and are genuinely exercising a right of criticism and not acting in malice, or attempt to impair the administration of justice, they are immune.
" In the second place, when attacks or comments are made on a judge or judges, disparaging in character and derogatory to their dignity, care should be taken to distinguish between what is a libel on the judge and what amounts really to contempt of court.
The fact that a statement is defamatory so far as the judge is concerned does not necessarily make it a contempt.
The distinction between a libel and a contempt was pointed out by a Committee of the Privy Council, to which a reference was made by the Secretary of State in 1892 (2).
A man in the Bahama Islands, in a letter published in a colonial newspaper criticized the Chief Justice of the Colony in an extremely ill chosen language which was sarcastic and pungent.
There was a veiled insinuation that he was an incompetent judge and a shirker of work and the writer suggested in a way that it would be a providential thing if he were to die.
A strong Board constituting of 11 members reported that the letter complained of.
though it might have been made the subject of proceedings for libel, was not, in the circumstances.
calculated to obstruct or interfere with the course of justice or the due administration of the law and therefore did not constitute a contempt of court.
The same principle was reiterated by Lord Atkin in the case of Devi Prashad vs King Emperor(, ') referred to above.
It was followed and approved of by the High Court of Australia in King vs Nicholls(1), and has been accepted as sound by this (1) Ambard vs Attney General for Trinidad and Tobago, at P. 335.
(2) In the matter of a special referencefrom the Bahama Islands (3) 70 I.A. 216.
(4) 1180 Court in Reddy vs The State of Madras (1).
The position therefore is that a defamatory attack on a judge may be a libel so far as the judge is concerned and it would be open to him to proceed against the libellor in a proper action if he so chooses.
If, however, the publication of the disparaging statement is calculated to interfere with the due course of justice or proper administration of law by such court, it can be punished summarily as contempt.
One is a wrong done to the judge personally while the other is a wrong done to the public.
It will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice, or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
It is well established that it is not necessary to prove affirmatively that there has been an actual interference with the administration of justice by reason of such defamatory statement; it is enough if it is likely, or tends in any way, to interfere with the proper admi nistration of law (2).
It is in the light of these principles that we will proceed to examine the facts of the present case.
It cannot be disputed that in regard to matters of contempt, the members of a Bar Association do not occupy any privileged or higher position than ordinary citizens.
The form in which the disparaging statement is made is also not material, but one very important thing has to be noticed in the case before us, viz., that even assuming that the statement was derogatory to the dignity of the judicial officers, very little publicity was given to this statement, and in fact, the appellants made their best endeavours to keep the thing out of the knowledge of the public.
The representation was made to 4 specified persons who were the official superiors of the officers concerned; and it has been found as a fact by the High Court that the appellants (1) (1952] section C. R. 452.
(2) Mr. Mookerjea J. in In re Motilal Ghosh and Othera, I.L.R. at 283.
1181 acted bona fide with no intention to interfere with the administration of justice though they might have been under a misapprehension regarding the precise legal position.
No copies of the resolution were even sent to the officers concerned.
Apart from the contents of the representation by the appellants and the language use therein, this fact would have a bearing on the questio as to whether the conduct of the appellants brought them within the purview of the law of contempt.
The first question that requires consideration is whether in making the allegations which they did against the two judicial officers, the appellants exceeded the limits of fair and legitimate criticism.
There were three resolutions passed at the meeting; the second, and third were of a mere formal character and do not require any consideration.
The offending statement is to be found in the first resolution which again is in two parts.
In the first part, there are allegations of a general nature against both the officers, but the second part enumerates under specific heads the complaints which the Committee had against each of them separately.
With regard to Kanhaya Lal, the a legations are that he does not record the evidence in cases tried by him properly, that in all criminal matters transferred to his court, where the accused are already on bail, he does not give them time to furnish fresh sureties with the result that they are sent to jail, and lastly, that he is not accommodating to lawyers at all.
So far as the other officer is concerned, one serious allegation made is, that he follows the highly illegal procedure of hearing two cases at one and the same time, and while he records the evidence in one case himself, he allows the Court Reader to do the thing in the other.
It is said also that he is short tempered and frequently threatens lawyers with proceedings for contempt.
Some of these complaints are not at all serious and no judge, unless he is hypersensitive, would at all feel aggrieved by them.
It is undoubtedly a grave charge that the Revenue Officer hears two cases simultaneously and allows the Court Reader to do the work for him.
If true 153 1182 it is a patent illegality and is precisely a matter which should be brought to the notice of the District Magistrate who is the administrative head of these officers.
As regards the first part of the resolution, the alle gations are made in general terms that ' these officers do not state facts correctly when they pass orders and that they are discourteous to the litigant public.
These do not by any moans amount to scandalising the court.
Such complaints are frequently heard in respect of many subordinate courts and if the appellants had a genuine grievance,it cannot be said that, in ventilating their grievances they exceeded the limits affair criticism.
The only portion of the resolution to which 'prima facie objection can be taken is that which describes these officers as thoroughly incompetent in law and whose judicial work does not inspire confidence.
Those remarks are certainly of a sweeping nature and can scarcely be justified.
Assuming, however, that this portion of the resolution is defamatory, the question arises whether it can be held to amount to contempt of court.
To answer this question, we have to see whether it is in any way calculated to interfere with the due administration of justice in these courts, or, in other words, whether such statement is likely to give rise to an apprehension in the minds of litigants as to the ability.
of the two judicial officers to deal properly with cases coming before them, or even to embarrass the officers themselves in the discharge of their duties.
We are unable to agree with the learned counsel for the respondent that whether or not the representation made by the appellants in the present case is calculated produce these results is to be determined solely and exclusively with reference to the language or con tents of the resolutions themselves; and that no other fact or circumstance can be looked into for this purpose, except perhaps as matters which vate or mitigate the offence of content: offence is found to have been committed that pleas of justification or privilege are speaking available to the defendant in contempt 1183 proceedings.
The question of publication also in the technical sense in which it is relevant in, a libel action may be inappropriate to the law of contempt.
But, leaving out cases of ex facie contempt, where the question arises as to whether a defamatory statement directed against a judge is calculated to undermine the confidence of the public in the capacity or integrity.
of the judge or is likely to deflect the court itself from a strict and unhesitant performance of its duties, all the surroundung facts and circumstances under which the statement was made and the degree of publicity a was givine to it would undoubtedly be relevant ' circumstances.
It is true as the learned counsel for the respondent suggests that the matter was discussed in the present case among the members of the Bar, and it might have been the subject matter of discussion amongst the officers also to whom copies of the resolutions were sent.
No doubt, there was publication as, is required by the law of libel, but in contempt proceedings, that is not by any means conclusive.
What is material is the nature.
and extent of the publication and whether or not it was likely to have an injurious effect on the minds of the public or of the judiciary itself and therefore to interference with the administration of justice.
On the materials before us,, it is difficult to say that the circumstances under which the representation was made by the appellants was calculated to have such effect.
There might have been some remote possibility but that cannot be taken note of.
We are clearly of the opinion that the contempt, if any, was only of a technical character, and that after the affidavits were filed on behalf of the appellants before the High Court, the proceedings against them should have been dropped.
The result, therefore, is that the appeal is allowed and the judgment of the High Court is set aside.
There will be no order for costs either here or in the court below in favour of either party.
Appeal allowed.
| (1) Vide Vaghoji vs Camaji, I.I. R. 117O The object of contempt proceedings is not to afford protection to judges personally from imputations to which they maybe exposed as individuals, but is intended to be a protection to the public whose interest would be very much affected if, by the act or conduct of any party, the authority of the court is lowered and the sense of confidence which the people have in the administration of justice by it is weakened.
When the court itself is attacked, the summary jurisdiction by way of contempt 'proceedings must be exercised with scrupulous care and only when the case is clear and beyond reasonable doubt.
There are two primary considerations which should weigh with the court in such cases, viz., first whether the reflection on the conduct or character of the judge is within the limits of fair and reasonable criticism, and secondly, whether it is a mere libel or defamation of the judge or amounts to a contempt of the court.
If it is a mere defamatory attack on the judge and is not calculated to interfere with the due course of justice or the proper administration of the law by such court, it is not proper to proceed by way of contempt.
Where the question arises whether a defamatory statement directed against a judge is calculated to undermine the confidence of the public in the competency or integrity of the judge or is likely to deflect the court itself from a strict and unhesitant performance of its duties, all the surrounding facts and circumstances under which the statement was made and the degree of publicity that was given to it would be relevant circumstances.
The question is not to be determined solely with reference to the language or contents of the statement made.
The Executive Committee of a District Bar Association received several complaints against the way in which the Judicial Magistrate and the Revenue Officer of the District disposed of cases and behaved towards litigants and lawyers, and passed a resolution which stated that " it was their considered opinion that the two officers are thoroughly incompetent in law, do not inspire confidence in their judicial work, are given to stating wrong facts when passing orders and are overbearing and discourteous to the litigant public and lawyers alike " and gave a list of various complaints against the officers.
This resolution was passed in camera, typed out by the President himself and forwarded confidentially to the District Magistrate, Commissioner of the Division, and the Chief Secretary and Premier of the State.
The District Magistrate moved the High Court of Allahabad to take action against the appellants, who had passed the resolution, for contempt of court.
The High Court held that the appellants were guilty of contempt but accepted their apology.
On appeal: Held, that in the light of all the circumstances of the case, the contempt, if any, was only of a technical character and that after the affidavits bad been filed on behalf of the appellants before the High Court, the proceedings against them should have been dropped.
|
Appeal No. 135 of 1952.
Appeal from the Judgment and Order dated the 19th March, 1951, of the High Court of Judicature at 1030 Bombay in Appeal No. 95 of 1950 arising from the Order dated the 28th August, 1950, of the said High Court exercising its Ordinary Original Civil Jurisdiction in Civil Miscellaneous No. 2 of 1950.
Bishan Narain (Sri Narain Andley with him) for the appellants.
M. C. Setalvad, Attorney General for India, and C. K. Daphtary, Solicitor General for India (J. B. Dadachanji, with them) for the respondents.
Registrar of Trade Marks in person.
May 7.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal on a certificate under section 109(c), Civil Procedure Code, from the judgment of the High Court of Judicature at Bombay reversing the judgment of Mr. Justice section C. Shah in Civil Miscellaneous No. 2 of 1950 and restoring the order of the Registrar of Trade Marks refusing to register the appellants ' trade mark.
The two questions that were canvassed before us and that fall for our determination are (1) whether the judgment of Mr. Justice Shah was subject to appeal under clause 15 of the Letters Patent of the Bombay High Court and (2) whether Mr. Justice Shah was right in interfering with the discretion exercised by the Registrar in refusing registration of the appellants ' mark.
The relevant facts shortly stated are these.
The appellants are a limited liability company incorporated under the Indian Companies Act, 1913, having their registered office at Chidambaram, South Arcot District, in the Province of Madras and carrying on the business of manufacturing cotton sewing thread.
The respondents are also a limited liability company registered under the English Companies Act.
They have their registered office at Eagley Mills, Bolton, (England) where they manufacture 'sewing thread.
One of the trade marks used by them on such thread consists of the device of an Eagle with 1031 outspread wings known as "Eagle Mark".
This mark was first advertised in the Calcutta Exchange Gazette of 5th June, 1896.
Since then sewing thread bearing this mark is being regularly imported into and sold in the Indian markets on an extensive scale.
Round about the year 1940 the appellants started selling cotton sewing thread under a mark consisting of the device of a bird with wings fully spread out perched on a cylinder of cotton sewing thread, with the words " Eagle Brand " and the name of the appellant company printed on the mark.
The respondents objected to the mark, upon which the appellants substituted the words " Vulture Brand " in the place of the words " Eagle Brand".
Thereafter in the year 1942 the appellants applied to the Registrar of Trade Marks, Bombay, for registration of their amended mark as a trade mark, in class 23, in respect of cotton sewing thread claiming that the mark had been in use by them since the year 1939.
Though on the objection of the respondents the appellants had named the Eagle in their mark a " Vulture " in every other respect the mark remained unchanged.
The respondents to redress their grievance started a passing off action in the District Court of South Arcot against the appellants.
That action failed on the ground that the evidence offered on their behalf was meagre and they failed in proving that there was any probability of purchasers exercising ordinary caution being deceived in buying the defendants ' goods under the impression that they were the plaintiff 's goods.
The result was that the grievance of the respondents remained unredressed.
As above stated, in 1942, the appellants made an application to the Registrar of Trade Marks at Bombay for the registration of their mark "Vulture Brand " under the .
The respondents gave notice of their opposition to that application under section 15(2), Rule 30, of the .
By his order dated 2nd September, 1949, the Registrar of Trade Marks allowed the respondents ' opposition and rejected the application 1032 made by the appellants.
He came to the conclusion that the appellants ' mark so nearly resembled the mark of the respondents as to be likely to deceive or cause confusion.
He further held that to describe the mark of the appellants as " Vulture Brand" when the device was that of an eagle was misleading and liable to cause confusion.
The appellants preferred an appeal against the order of the Registrar to the High Court of Bombay as permitted by the provisions of section 76 of the .
Mr. Justice Shah allowed the appeal, set aside the order of the Registrar and directed the Registrar to register the mark of the appellants as a trade mark.
From the judgment of Mr. Justice Shah an appeal was preferred by the respondents under clause 15 of the Letters Patent of the Bombay High Court.
The appeal was allowed and the order of the Registrar was restored with costs throughout.
Hence this appeal.
In our judgment both the questions canvassed in this appeal admit of an easy answer in spite of a number of hurdles and difficulties suggested during the arguments.
It is not disputed that the decision of Mr. Justice, Shah does constitute a judgment within the meaning of clause 15 of the Letters Patent.
That being so his judgment was subject to appeal under that clause, the material part of which relevant to this enquiry is: " And We do further ordain that an appeal shall lie to the said High Court of Judicature at Bombay from the judgment of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act.
" It was said that the provisions of this clause could not be attracted to an appeal preferred to the High Court under section 76 of the and further that the clause would have no application in a case, where the judgment could not be said to have been delivered pursuant to section 108 of the Government of India Act, 1915.
Both these objections in our opinion are not well founded.
Section 76 (1) provides: 1033 "Save as otherwise expressly provided in the Act an appeal shall lie, within the period prescribed by the Central Government, from any decision of the Registrar under this Act or the rules made thereunder to the High Court having the jurisdiction.
" The does not provide or lay down% ' any procedure for the future conduct or career of that appeal in the High Court, indeed section 77 of the Act provides that the High Court can if it likes make rules in the matter.
Obviously after the appeal had reached the High Court it has to be determined according to the rules of practice and procedure of that Court and in accordance with the provisions of the charter under which that Court is constituted and which confers on it power in respect to the method and manner of exercising that jurisdiction.
The rule is well settled that when a statute directs that an appeal shall lie to a Court already established, then that appeal must be regulated by the practice and procedure of that Court.
This rule was very succinctly stated by Viscount Haldane L.C. in National Telephone Co., Ltd. vs Postmaster General in these terms: "When a question is stated to be referred to an established Court without more, it, in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches.
" The same view was expressed by their Lordships of the Privy Council in R.M.A.R.A. Adaikappa Chettiar vs Ra.
Chandrasekhara Thevar (2), wherein it was said: "Where a legal right is in dispute and the ordinary Courts of the country are seized of such dispute the Courts are governed by the ordinary rules of procedure, applicable thereto and an appeal lies if authorised by such rules, notwithstanding that the legal right claimed arises under a special statute which does not, in terms confer a right of appeal." (1) [19I3] A.C. 546.
134 (2) (1947) 74 I,A. 264, 1034 Again in Secretary of State for India vs Chellikani Rama Rao (1), when dealing with the case under the Madras Forest Act their Lordships observed as follows: "It was contended on behalf of the appellant that all further proceedings in Courts in India or by way of appeal were incompetent, these being excluded by the terms of the statute just quoted.
In their Lordships ' opinion this objection is not well founded.
Their view is that when proceedings of this character reach the District Court, that Court is appealed to as one of the ordinary Courts of the country, with regard to whose procedure, orders, and decrees the ordinary rules of the Civil Procedure Code apply." Though the facts of the cases laying down the above rule were not exactly similar to the facts of the present case, the principle enunciated therein is one of general application and has an apposite application to the facts and circumstances of the present case.
Section 76 of the confers a right of appeal to the High Court and says nothing more about it.
That being so, the High Court being seized as such of the appellate jurisdiction conferred by section 76 it has to exercise that jurisdiction in the same manner as it exercises its other appellate jurisdiction and when such jurisdiction is exercised by a single Judge, his judgment becomes subject to appeal under clause 15 of the Letters Patent there being nothing to the contrary in the .
The objection that Mr. Justice Shah 's judgment having been delivered on an appeal under section 76 of the could not be said to have been delivered pursuant to section 108 of the Government of India Act is also without force and seems to have been based on a very narrow and limited construction of that section and on an erroneous view of its true intent and purpose.
Section 108 of the Government of India Act, 1915, provides : " Each High Court may by its own rules provide as it thinks fit for the exercise, by one or more Judges, or by division courts constituted by two or more Judges (1) Mad.
617. 1035 of the High Court, of the original and appellate juris diction vested in the Court.
" The section is an enabling enactment and confers power on the High Courts of making rules for the exercise of their jurisdiction by single Judges or by division courts.
The power conferred by the section is not circumscribed in any manner whatever and the nature of the power is such that it had, to be conferred by the use of words of the widest amplitude.
There could be no particular purpose or object while conferring the power in limiting it qua the jurisdiction already possessed by the High Court, when in the other provisions of the Government of India Act it was contemplated that the existing jurisdiction was subject to the legislative power of the Governor General and the jurisdiction conferred on the High Court was liable to be enlarged, modified and curtailed by the Legislature from time to time.
It is thus difficult to accept the argument that the power vested in the High Court under subsection (1) of section 108 was a limited one, and could only be exercised in respect to such jurisdiction as the High Court possessed on the date when the Act of 1915 came into force.
The words of the sub section "vested in the court" cannot be read as meaning "now vested in the court".
It is a well known rule of construction that when a power is conferred by a statute that power may be exercised from time to time when occasion arises unless a contrary intention appears.
This rule has been given statutory recognition in section 32 of the Interpretation Act.
The purpose of the reference to section 108 in clause 15 of the Letters Patent was to incor porate that power in the charter of the Court itself, and not to make it moribund at that stage and make it rigid and inflexible.
We are therefore of the opinion that section 108 of the Government of India Act, 1915, conferred power on the High Court which that Court could exercise from time to time with reference to its jurisdiction whether existing at the coming into force of the Government of India Act, 1915, or whether conferred on it by any subsequent legislation.
1036 It was argued that simultaneously with the repeal of section 108 of the Government of India Act, 1915, and of the enactment of its provisions in section 223 of the Government of India Act of 1935 and later on :in article 225 of the Constitution of India, there had not been any corresponding amendment of clause 15 of the Letters Patent and the reference to section 108 in clause 15 of the Letters Patent could not therefore be taken as relating to these provisions, and, that being so, the High Court had no power to make rules in 1940 when the was enacted under the repealed section and the decision of Mr. Justice Shah therefore could not be said to have been given pursuant to section 108.
This objection also in our opinion is not well founded as it overlooks the fact that the power that was conferred on the High Court by section 108 still subsists, and it has not been affected in any manner whatever either by the Government of India Act, 1935, or by the new Constitution.
On the other hand it has been kept alive and reaffirmed with great vigour by these statutes.
The High Courts still enjoy the same unfettered power as they enjoyed under section 108 of the Government of India.
Act, 1915, of making rules and providing whether an appeal has to be heard by one Judge or more Judges or by Division Courts consisting of two or more Judges of the High Court.
It is immaterial by what label or nomenclature that power is described in the different statutes or in the Letters Patent.
The power is there and continues to be there and can be exercised in the same manner as it could be exercised when it was originally conferred.
As a matter of history the power was not conferred for the first time by section 108 of the Government of India Act, 1915.
It had already been conferred by section 13 of the Indian High Courts Act of 1861.
We are further of the opinion that the High Court was right in the ' view that reference in clause 15 to section 108 should be read as a reference to the corresponding provisions of the 1935 Act and the Constitution.
The canon of construction of statutes enunciated in section 38 of the 1037 Interpretation Act and reiterated with some modifications in section 8 of the General Clauses Act is one of general application where statutes or Acts have to be construed and there is no reasonable ground for holding that that rule of construction should not be applied in construing the charters of the different High Courts.
These charters were granted under statutory powers and are subject to the legislative power of the Indian Legislature.
Assuming however, but not conceding, that strictly speaking the provisions of the Interpretation Act and the General Clauses Act do not for any reason apply, we see no justification for holding that the principles of construction enunciated in those provisions have no application for construing these charters.
For the reasons given above we hold that the High Court was perfectly justified in overruling the preliminary objection and in holding that an appeal was competent from the judgment of Mr. Justice Shah under clause 15 of the Letters Patent.
Reliance was Placed by the appellants in the High Court and before us on the decision of the High Court of Judicature of Calcutta in Indian Electric Works vs Registrar of Trade, Marks(1) wherein a contrary view was expressed.
After a full consideration of the very elaborate and exhaustive judgment delivered in that case by both the learned Judges of the Bench that heard the appeal and with great respect we think that that case was wrongly decided and the decision is based on too narrow and restricted a construction of section 108 of the Government of India Act, 1915, and that in that decision full effect has not been given to the true intent and purpose of clause 44 of the Letters Patent.
Both the learned Judges there took the view that the authority given by section 108(l) of the 1915 statute to make rules for the exercise by one or more Judges of the Court 's appellate jurisdiction was limited to the jurisdiction then vested in the Court by section (1) A.I.R. 1947 Cal.
1O38 106 (1) of the Act and by clause 16 of the Letters Patent.
It was held that such rules thus could not relate to jurisdiction conferred by an Act passed after the commencement of the 1915 statute nor to an appeal heard by the Court pursuant to such an Act, since the jurisdiction to hear such appeal having been conferred by the particular Act could not be said to have been conferred upon, or vested in, the Court by section 106(1) and by clause 16 of the Letters Patent.
This argument suffers from a two fold defect.
In the first place it does not take into consideration the other provisions of the Government of India Act, 1915, particularly the provision contained in sections 65 and 72.
By section 65(1) of the Government of India Act, 1915, the Governor General in Legislative Council was given power to make las for all persons, for all courts, and for all places and things, within British India.
By section 72 he was also given power for promulgating ordinances in cases of emergency.
By the Charter Act of 1915 therefore the High Court possessed all the jurisdiction that it had at the commencement of the Act and could also exercise all such jurisdiction that would be conferred upon it from time to time by the Legislative power conferred by that Act.
Reference to the provisions of section 9 of the Indian High Courts Act of 1861 which section 106 (1) of the Government of India Act, 1915, replaced makes this proposition quite clear.
In express terms section 9 made the jurisdiction of the High Courts subject to the legislative powers of the Governor General in Legislative Council.
Section 106 only conferred on the High Court " jurisdiction and power to make rules for regulating the practice of the court, as were vested in them by Letters Patent, and subject to the provisions of any such Letters Patent, all such jurisdiction, powers and authority as were vested in those courts at the commencement of the Act.
" The words " subject to the legislative powers of the Governor General " used in section 9 of the Charter Act of 1861 were omitted from the section, because of the wide power conferred on the Governor General by section 65 of the Government of India Act, 1915.
The 1039 jurisdiction conferred on the High Courts from the very inception was all the time liable to and subject to alteration by appropriate legislation.
It is therefore not right to say that section 108 (1) of the Government of India Act, 1915, empowered the High Courts to make rules only concerning the jurisdiction that those courts exercised when that Act was passed; on the other hand power was also conferred on them to make rules in respect of all jurisdiction then enjoyed or with which they may be vested hereafter.
Clause 16 of the Letters Patent on which reliance was placed by the learned Judges of the Calcutta Court is in these terms: " The High Court shall be a Court of appeal from the civil Courts of Bengal and from all other Courts subject to its superintendence and shall exercise appellate jurisdiction in such cases as are subject to appeal to the said High Court by virtue of any laws or regulations now in force." This clause is also subject to the legislative power of the appropriate Legislature as provided in clause 44 of the Letters Patent.
This clause is in these terms: " The provisions of the Letters Patent are subject to the legislative powers of the Governor General in Legislative Council.
" That being so the last words of the clause " now in force " on which emphasis was placed in the Calcutta judgment lose all their importance, and do not materially affect the point.
The true intent and purpose of clause 44 of the Letters Patent was to supplement the provisions of clause 16 and other clauses of the Letters Patent.
By force of this clause appellate jurisdiction conferred by fresh legislation on the High Courts stands included within the appellate jurisdiction of the court conferred by the Letters Patent.
A reference to clause 15 of the Letters Patent of 1861, which clause 16 replaced, fully supports this view.
This clause included a provision to the following effect : " or shall become subject to appeal to the said High Court by virtue of such laws and regulations 1040 relating to Civil Procedure as shall be hereafter made, by the Governor in Council," in addition to the words " laws or regulations now in force".
The words above cited wore omitted from clause 16 of the later charter and only the words "laws or regulations now in force" were retained, because these words were incorporated in the Letters Patent and were made of general application as governing all the provisions thereof by a separate clause.
The Judges who gave the Calcutta decision on the other hand inferred from this change that the appellate jurisdiction of the High Court as specified in clause 16 was confined only to the jurisdiction to hear appeals from the the civil Courts mentioned in that clause and appeals under Acts passed and regulations in force up to the year 1865.
In our opinion the learned Judges were in error in thinking that the appellate jurisdiction possessed by the High Court under the Letters Patent of 1865 was narrower than the jurisdiction it possessed under clause 15 of the Letters Patent of 1861.
Whatever jurisdiction had been conferred on the High Court by clause 15 of the Letters Patent of 1861 was incorporated in the Letters Patent of 1865 (as amended) and in the same measure and to the same extent by the provisions of clauses 16 and 44 of that charter.
We are further of the opinion that the Calcutta decision is also erroneous when it expresses the view that the range and ambit of the power conferred on the High Court by section 108 of the Government of India Act of 1915 was limited by the provision of section 106 (1) of the Act or by the provisions of clause 16 of the Letters Patent.
There is no justification for placing such a construction on the plain and unambiguous words of that section.
Section 108 is an enactment by itself and is unrestricted in its scope, and covers a much wider field than is covered by section 106 of the Government of India Act.
The only association it has with section 106 is that in sequence it follows that sec tion.
It confers a power on the High Court to make rules in respect not only of the jurisdiction that it 1041 enjoyed in 1915 but it also conferred power on it to make rules in respect of jurisdiction which may hereafter be conferred on it by the enactments enacted by the Governor General in Legislative Council.
On the line of thought adopted in the Calcutta decision the learned Judges were forced to the conclusion which seems somewhat strange that the jurisdiction conferred by the Letters Patent on the Calcutta High Court is much more limited and restricted than has been conferred on some of the new High Courts in India by their Letters Patent.
Illustratively, Clause I I of the Letters Patent of Patna High Court issued in 1916 provides as follows: " And We do further ordain that, the High Court of Judicature at Patna shall be a Court of Appeal from the Civil Courts of the Province of Bihar and Orissa and from all other Courts subject to its superintendence, and shall exercise appellate jurisdiction in such cases as were, immediately before the date of the publication of these presents, subject to appeal to the High Court of Judicature at Fort William in Bengal by virtue of any law then in force, or as may after that date be declared subject to appeal to the High Court of Judicature at Patna by any law made by competent legislative authority for India The Letters Patent of the Labore High Court, the High Court of Rangoon and the Letters Patent of the Nagpur High Court also contain identical clauses.
It is clear from these clauses that in respect of cases subject to appeal to these High Courts the civil appellate jurisdiction is flexible and elastic.
Mr. Justice Das in the Calcutta decision under discussion took the view that omission of the words underlined in clause 11 from clause 16 of the Letters Patent of the Calcutta High Court made the civil appellate jurisdiction of that court under clause 16 as rigidly fixed, and that it could be exercised only over courts and only in respect of cases mentioned therein.
When the attention of the learned Judge was.
drawn to the provisions of clause.
44 of the Letters Patent he 1042 was constrained to say that inflexibility bad to a great extent been modified by preserving the powers of Indian Legislative authority in section 9 of the High Courts Act, by the amended clause 44 of the Letters Patent and by section 223 of the.
1935 Act.
The learned Judge however felt that there was still a difference of a vital character between the Letters Patent of the Calcutta High Court and of the newly constituted High Courts inasmuch as cases subsequ ently declared by any Indian enactment to be subject to appeal to the Calcutta High Court could not strictly speaking come within its appellate jurisdiction under clause 16 although the High Court exercised appellate jurisdiction over these.
We have not been able to appreciate this distinction and it seems to us it is based on some misapprehension as to the true intendment of clause 44 of the Letters Patent.
The purpose and intent of clause 44 of the Letters Patent was to declare that in addition to the jurisdiction conferred by clause 16 it would also exercise the appellate jurisdiction which from time to time would be conferred on it by subsequent enactments.
It is inconceivable that larger appellate jurisdiction and greater powers in the matter of making rules would have been conferred upon the newly constituted High Courts than upon the High Court of Calcutta.
The words "pursuant to section 108 of the Government of India Act 1915" occurring in clause 15 of the Letters Patent do not in any way restrict the scope of the right of appeal conferred by that clause to appeals that come to the High Court under its appellate jurisdiction under clause 16 of the Letters Patent only.
On the other hand we think that these rules have application to all appellate jurisdiction exercised by that court whether existing or conferred upon it by subsequent legislation.
The learned Judges in the Calcutta case negatived the applicability of the principle enunciated in 1913 Appeal Cases 546 and applied by the Privy Council in several cases to the matter before them, on the following reasoning set out by Mr. Justice Das: 1043 "The incidents and powers attached to the Registrar as a tribunal fall far short of those which were attached, to the tribunal in the Gurdwara case (1) and to which Sir George Rankin particularly and pointedly referred Having regard to the plain language of clause 16, and in the absence therein of like words which appeal in the concluding portions of the correspond clauses of the Letters Patent of the other High Court to which I have already referred and which make their appellate jurisdiction flexible and elastic it is impossible to hold that section 76 of the has merely extended the appellate jurisdiction of this Court under clause 16 by the addition of a new subject matter of appeal so as to attract the general principle enunciated in 1913 Appeal Cases 546 . .
The truth is that the has created new rights, e.g., a right to get a trade mark registered and has given certain new advantages con sequent upon such registration.
It has created new Tribunals for its own purposes and it has conferred a new appellate jurisdiction on this Court.
It has authorized this Court to make rules regulating the conduct and procedure of the proceedings under the Act before it.
This Court has framed separate set of rules accordingly.
This very fact makes it impossible to attract the ordinary rules of procedure regarding appeals in this Court and indicates that an appeal under section 76 of the Act involves the exercise of a new appellate jurisdiction regulated by new rules".
This reasoning in our opinion is faulty on a number of grounds.
The first error lies in the assumption that the Gurdwara Act did not create new rights and did not create new appellate jurisdiction in the High Court which it did not possess before.
The Gurdwara Act created peculiar rights in religious bodies and negatived the civil rights of large bodies of Mahants and other persons.
Stick rights were unknown before in civil law.
The High Court as an established court of record was constituted a court of appeal from the decisions of the Gurdwara Tribunal.
The principle enunciated in 1913 Appeal Cases 546 was applied by (1) 63 I.A. 180.
1044 Sir George Rankin to appeals heard by the High Court under its newly created appellate jurisdiction, and we speak with great respect, in our opinion, very correctly.
We have not been able to appreciate the special peculiarities of the rights created by the which place the appellate jurisdiction conferred on the High Court by section 76 on a different level from the jurisdiction created by the special provisions of the Gurdwara Act.
The rights created by the are civil rights for the protection of persons carrying on trade under marks which have acquired reputation.
The statute creates the Registrar a tribunal for safeguarding these rights and for giving effect to the rights created by the Act, and the High Court as such without more has been given appellate jurisdiction over the decisions of this tribunal.
It is not easy to understand on what grounds it can be said that the High Court while exercising this appellate jurisdiction has to exercise it in a manner different from its other appellate jurisdiction.
It seems to us that this is merely an addition of a new subject matter of appeal to the appellate jurisdiction already exercised by the High Court.
The second error lies in the assumption that the appellate jurisdiction exercised by the High Court of Calcutta is much more limited than that possessed by the other High Courts.
The matter has been discussed at length in an earlier part of this judgment.
We have also not been able to appreciate the emphasis laid to negative the applicability of clause 15 of the Letters Patent by reference to the provisions of section 77 of the Act.
The provisions of that section are merely enabling provisions and, as already pointed out, it is open to the High Court to make use of them or not as it likes.
There is nothing in the provisions of that section which debars the High Court from hearing appeals under section 76 of the according to the rules under which all other appeals are heard, or from framing rules for the exercise of that jurisdiction under section 108 of the Government of India Act, 1915, for hearing those 1045 appeals by single judges or by division benches.
Even if section 77 had not been enacted it could not be said that the High Court would then have no power to make rules for the hearing of appeals under section 76.
There are a number of legislative enactments which have conferred appellate jurisdiction on the High Court without more and the High Court exercises appellate jurisdiction conferred by these enactments by framing its own rules under the powers it already possesses under its different charters and under the various statutes which have conferred power on it.
It was suggested that the reasoning of the High Court is supported by the rule laid down in Secretary of State vs Mask and Co.(1).
In our opinion that rule has neither any relevancy in this case nor is it in any manner in conflict with the rule laid down in 1913 Appeal Cases 546 or in the later Privy Council decisions above referred to.
There, by section 188 of the Sea Customs Act the jurisdiction of the civil courts was excluded, and an order made by the Collector on an appeal from an order of the Assistant Collector was made final.
A suit was filed to challenge the order of the Collector on the ground that the finality declared by section 188 was no bar to such a suit in a civil court.
That contention was negatived on the ground that when a liability not existing in common law is created by a statute which at the same time gives a special and particular remedy for enforcing it, with respect to that class it has always been held that the party must adopt the form of remedy given by the statute.
The has not created any special forum for the hearing of an appeal as had been created by the Sea Customs Act.
On the other hand, the has conferred appellate jurisdiction on an established court of law.
Further, the Sea Customs Act had made the order of the Collector passed on an appeal final.
There is no such provision in the .
It has only declared that an appeal shall lie to the High Court from the order of the Registrar and has said nothing more about it.
Clearly, therefore, to this case the rule (1) 67 I.A. 222. 1046 enunciated in 1913 Appeal Cases 546 had application, and the rule stated in Mask 's case (1) had no bearing on this point.
As regards the merits of the case, we are in entire agreement with the decision of the High Court and with the reasons given in that decision.
The relevant part of section 8 of the is in these terms: "No trade mark nor part of a trade mark shall be registered which consists of, or contains, any scandalous design, or any matter the use of which would by reason of its being likely to deceive or to cause confusion or otherwise, be disentitled to protection in a court of justice".
Under this section an application made to register a trade mark which is likely to deceive or to cause confusion has to be refused notwithstanding the fact that the mark might have no identity or close resemblance with any other trade mark.
The Registrar has to come to a conclusion on this point independently of making any comparison of the mark with any other registered trade mark.
What the Registrar has to see is whether looking at the circumstances of the case a particular trade mark is likely to deceive or to cause confusion.
The principles of law applicable to such cases are well settled.
The burden of proving that the trade mark which a person seeks to register is not likely to deceive or to cause confusion is upon the applicant.
It is for him to satisfy the Registrar that his trade mark does not fall within the prohibition of section 8 and therefore it should be registered.
Moreover, in deciding whether a particular trade mark is likely to deceive or cause confusion that duty is not discharged by arriving at the result by merely comparing it with the trade mark which is already registered and whose proprietor is offering opposition to the registration of the mark.
The real question to decide in such cases is to see as to how a purchaser, who must be looked upon as an average man of ordinary intelligence, would react to a (1) 67 I.A. 222.
1047 particular trade mark, what association he would form by looking at the trade mark, and in what respect he would connect the trademark with the goods which* he would be purchasing.
So far as the present case is concerned the goods sold under the respondents ' trade mark are well known and are commonly asked for as II Eagley " or " Eagle ", and the particular feature of the trade mark of the respondents by which the goods are identified and which is associated in the mind of the purchaser is the representation of an Eagle appearing in the trade mark.
If the trade mark conveys the idea of an Eagle and if an unwary purchaser is likely to accept the goods of the appellants as answering the requisition for Eagle goods, then undoubtedly the appellants ' trade mark is one which would be likely to deceive or cause confusion.
It is clear to us that the bird in the appellants ' trade mark is likely to be mistaken by an average man of ordinary intelligence as an Eagle and if he asked for Egg`e goods and he got goods bearing this trade mark of the appellants it is not likely that he would reject them by saying that this cannot be an Eagle.
Two years prior to the application for registration, the respondents described this particular bird an Eagle and called their brand Eagle Brand, The same bird was later on described by them a vulture and the explanation offered was that they so described owing to an honest and bona fide mistake.
We have no hesitation in holding that the appellants ' camouflaging an Eagle into a vulture by calling it such is likely to cause confusion.
Whatever else may be said about the bird in the appellants ' trade mark, it certainly does not represent a vulture or look like a vulture of any form or shape.
What has been named by the plaintiffs as a vulture is really an eagle seated in a different posture.
That being so, the High Court was perfectly right in the view that Mr. Justice Shah was in error in interfering with the discretion possessed and exercised by the Registrar, and that the appellants had failed to discharge the onus that rested heavily on them to prove that the trade mark which they wanted the Registrar 1048 to register was not likely to deceive or cause confusion.
The learned counsel for the appellants contended that the question whether his clients ' trade mark was likely to deceive or cause confusion had been 'Concluded by the earlier judgment of the Madras High Court in the passing off action and already referred to in an early part of the judgment.
It is quite clear that the onus in a passing off action rests on the plaintiff to prove whether there is likelihood of the defendant 's goods being passed off as the goods of the plaintiff.
It was not denied that the general get up of the appellants ' trade mark is different from the general get up of the respondents ' trade mark.
That being so, it was held by the Madras High Court in the passing off action that on the meager material placed on record by the plaintiffs they had failed to prove that the defendants ' goods could be passed off as the goods of the plaintiffs.
The considerations relevant in a passing off action are somewhat different than they are on an application made for registration of a mark under the and that being so the decision of the Madras High Court referred to above could not be considered as relevant on the questions that the Registrar had to decide under the provisions of the Act.
For the reasons given above we are of the opinion that this appeal must fail and we accordingly dismiss it with costs.
Appeal dismissed.
| Section 76(l) of the , provides that an appeal shall lie from any decision of the Registrar under the Act or the rules made thereunder, to the High Court having jurisdiction, but the Act did not make any provision with regard to the procedure to be followed by the High Court in the appeal or as to whether the order of the High Court was appealable: Held that the High Court had to exercise its appellate jurisdiction under section 76 of the Act in the same manner as it exercised its other appellate jurisdiction, and when such jurisdiction was exercised by a Single Judge, his judgment was appealable under el.
15 of the Letters Patent.
National Telephone Co. vs Postmaster General ([1913] A.C. 546),R. M. A. R. A. Adaikappa Chettiar vs Ra.
chandrasekhara Thevar (74 I.A. 264), Secretary of State vs Chellikani Rama Rao (I. L.R. 39 Mad. 617) referred to.
The power conferred by section 108 of the Government of India Act, 1915, on the High Courts, of making rules for the exercise of their jurisdiction by Single Judges or by Division Courts could be exercised not only in respect to such jurisdiction 1O29 as the High Courts possessed when the Act of 1915 came into ' force; but also in respects of jurisdictions I conferred on the High Court by subsequent legislation, e.g., s, 76 of the .
Under the rules (if construction enunciated in section 8 of the General Clauses Act and section 38 of the Interpretation Act, which are of general application, the reference to s.108 of the Government of India Act, 1915, in el.
15 of the Letters Patent should, after the enactment of the Constitution of 1950, be read as reference to the corresponding provisions of article 225 of the Constitution.
The ambit of the power conferred on the High Courts by a.108 of the Government of India Act, 1915, is not limited by s.106(l) of the said Act or by el. 16 of the Letters Patent of the Calcutta High Court.
Indian Electric Works vs Registrar of Trade Marks (A.I.R. overruled.
Secretary of State vs Mask & Co. (67 I.A. 222) and the Gur dwara Case (63 I.A. 180) distinguished.
The respondents, a company registered in England, manu factured sewing thread with the device of an Eagle with outspread wings known as the "Eagle Mark" as their trade mark, and since 1896 this thread was being sold in the Indian markets on an extensive scale.
The appellants, a company registered in India, began in 1940 to sell sewing thread with the device of a bird resembling an eagle with wings fully spread out with the words "Eagle Brand" as their mark.
On the objection of the respondents the appellants subsequently changed the name to "Vulture Brand" without changing the mark in other respects.
The respondents instituted an action against the appellants for passing off, but that was dismissed.
The appellats subsequently applied for registration of their trade mark but their application was disraissed by the Registrar on the ground that the appellants ' mark so nearly resembled the respondents ' mark as to be likely to deceive the public and cause confusion.
This order was reversed by a Single Judge of the High Court of Bombay but restored on appeal by a Division Bench: Held (i) that the judgment of the Division Bench upholding the order of the Registrar rejecting the application, on the ground that the mark was likely to deceive and cause confusion, was right; (ii) that the considerations relevant in a passing off action are somewhat different from those which are relevant in an application for registration of a trade mark under the , and the earlier judgment of the High Court in the action for passing off was not conclusive on the matter.
|
iminal Appeal No. 22 of 1953.
Appeal by special leave from the Judgment and Order dated the 19th November, 1952, of the High Court of Judicature of Punjab at Simla in Criminal Appeal No. 102 of 1952 and Criminal Revision Nos.
423 146 and 499 of 1952 of the Court of the Sessions Judge, Jullundur, in Sessions Case No. 30 of 1951 and Sessions Trial No. 5 of 1951.
Jai Gopal Sethi (R. L. Kohli and Deva Singh, with him) for the appellants.
Gopal Singh for the respondent.
May 15.
The Judgment of the Court was delivered by BosE J.
Four persons appeal against sentences of death passed upon them in convictions for a double murder, the victims being two brothers, Rattan Singh and Bawa Singh.
The learned Sessions Judge convicted three others also but sentenced all, including the four appellants, to transportation for life.
The High Court acquitted three of the seven but sustained the convictions of the four appellants and enhanced their sentences in each case to death.
The prosecution story is simple.
All seven accused belong to the same village and belong to the same faction or "party", as Mst.
Punnan (P.W. 2) calls it.
Of the seven, the appellants Dalip Singh and Battan Singh are brothers.
Jarnail Singh who was acquitted is a son of Battan Singh.
The remaining four, including the appellants Sadhu Singh and Kundan Singh, are not related to the other three and, except for the evidence that they belong to the same party, are not shown to have any common interest with the other three.
The appellants Dalip Singh and Battan Singh are said to have assaulted the two dead men Rattan and Bawa about twenty years before the occurrence.
They were prosecuted and convicted and served short terms of imprisonment.
Dalip Singh and Battan Singh are also said to be dacoits and it is said that they believed that the two dead men used to furnish information against them to the police.
This is said to be the motive for the murders.
Why the others should have joined in, except on the basis that they belong to the same "Party", is not disclosed.
147 The prosecution case is as follows: On 16th June, 1951, Rattan Singh was taking some food out to a well a short distance from his house for himself and his son.
This was about 2 p.m.
Just as he left the house, his wife Mst.
Punnan (P.W. 2) heard cries of alarm and on rushing out with her daughter Mst.
Charni (P.W. 11) saw all seven accused assaulting her husband.
They beat him up till he fell to the ground.
As soon as Rattan Singh fell down, they left him and rushed to his (Rattan Singh 's) Haveli where the other brother Bawa Singh was lying on a cot, shouting that they would also make short work of him.
All seven belaboured him on the cot, then they dragged him out and beat him up some more.
After this they returned to where Rattan Singh was still lying on the ground and gave him some more blows.
Then they ran away.
Bawa Singh died very shortly after the assault.
The other brother survived a little longer but he also died not long after.
According to Mst.
Punnan (P.W. 2) the accused were armed as follows: The appellants Dalip Singh and Sadhu Singh with barchhas; the appellant Battan Singh and two of the accused who have been acquitted with lathis; the appellant Kundan Singh had a takwa a hatchet with along handle, and the accused Kehar Singh, who has been acquitted, had a khunda a hefty stick with a curved iron end.
The medical evidence discloses that Rattan Singh had nineteen injuries on his person.
Of these, only two, on the head, would have been fatal in themselves.
The rest were on non vital parts like the foot, ankle, leg, knee, thigh, buttock, forearm and wrist, but of these six were grievous.
The doctor says death was caused by shook produced by the multiple injuries aided by haemorrhage in the brain due to injury No. 14.
The other brother Bawa had sixteen injuries but except for two the rest were on non vital parts.
One of the two was on the head and the other ruptured the 148 spleen.
The rest were on the ankle, leg, knee, thigh, elbow, thumb and wrist, but eleven of them were grievous.
In his case the doctor put the death down to rupture of the spleen.
In Rattan Singh 's case, only one of the injuries was inflicted by a sharp edged pointed weapon and all the rest by blunt weapons.
The two on the head were inflicted by blunt weapons.
In Bawa Singh 's case, four wounds were caused by a sharp edged or pointed sharp edged weapon.
The others were all inflicted by blunt weapons.
Here again, the fatal injury which ruptured the spleen was caused by a blunt weapon.
This analysis would appear to indicate that neither of the appellants Dalip Singh and Sadhu Singh, who carried spears, nor the appellant Kundan Singh, who carried a hatchet, aimed at any vital part; and of those who had blunt weapons, the appellant Battan Singh who had a lathi has alone been convicted while Indar Singh and Jarnail Singh, who also had lathis, and kehar Singh, who had a khunda, have all been acquitted; and yet Battan Singh alone could hardly have been responsible for eighteen injuries on Rattan Singh and nine on Bawa Singh.
The appellant Dalip Singh was arrested on the 17th June and the other three on the 18th.
Each was wearing blood stained clothes.
The learned Sessions Judge did not attach much importance to the bloodstained clothes, nor did he regard the recovery of certain weapons, some of which were blood stained, as of much consequence.
But he was impressed with the evidence of the two eyewitnesses Mst.
Punnan (P.W. 2) and Mst.
Charni (P. W. 11) and believing them convicted each of the seven accused under section 302 read with section 149, Indian Penal Code.
He said that as the fatal injuries could not be attributed to any one of the accused he refrained from passing the sentence of death.
All the assessors considered all seven accused guilty.
The learned High Court Judges did not attach any importance to the recovery of the weapons because 149 for one thing they were not recovered till the 30th, that is to say, not until fourteen days after the murders, and when found, one set pointed out by Jarnail Singh, who has been acquitted, was found in Dalip Singh 's field and another set, pointed out by Sadhu Singh, was found in Kehar Singh 's field.
But they considered the blood stained clothes an important factor.
They were not prepared to believe the two eye witnesses all the way, partly because they were of opinion that a part of their story was doubtful and seemed to have been introduced at the instance of the police and partly because they considered that when the fate of seven men hangs on the testimony of two women "ordinary prudence" requires corroboration.
They found corroboration in the case of the four appellants because of the blood stained clothes and none in the case of the others.
Accordingly, they convicted the four appellants and acquitted the others.
Now this has led the learned Judges into an inconsistency and it is that which led to the granting of special leave to appeal.
The learned Judges say that their conclusion is that (1) "generally the story related by Mst.
Punnan and Mst.
Charni is true; (2) that certainly not less than five persons took part in the beating of the two deceased; and (3) that the corroboration required by prudence is afforded by the presence of the blood stained clothes found on the persons of the four appellants who have been convicted.
" As regards the three accused whom they acquitted the learned Judges say The other three accused may or may not have taken part in the affair.
" Now it is clear from the above that it is impossible to ascribe any particular injury to any particular person.
Therefore ' it is impossible to convict any one of the accused of murder simpliciter under section 302, 21 150 nor do the learned Judges attempt to do that.
They convict under section 302 read with section 149.
But section 149 requires the presence of five persons who share the common object.
It is true that in one place the learned Judges say that there were certainly not less than five present but in the very next breath they say that the three whom they acquit "may or may not have taken part in the affair".
If those three are eliminated, then we are left with only four and that militates against their previous finding that they were at least five.
Before section 149 can be called in aid, the court must find with certainty that there were at least five persons sharing the common object.
A finding that three of them "may or may not have been there" betrays uncertainty on this vital point and it consequently becomes impossible to allow the conviction to rest on this uncertain foundation.
This is not to say that five persons must always be convicted before section 149 can be applied.
There are cases and cases.
It is possible in some eases for Judges to conclude that though five were unquestionably there the identity of one or more is in doubt.
In that case, a conviction of the rest with the aid of section 149 would be good.
But if that is the conclusion it behoves a court, particularly in a murder case where sentences of transportation in no less than four cases have been enhanced to death, to say so with unerring certainty.
Men cannot be hanged on vacillating and vaguely uncertain conclusions.
In fairness to the learned Judges we have examined the evidence with care to see whether, if that was in their minds, such a conclusion could be reached in this particular case on the evidence here.
That it might be reached in other cases on other facts is undoubted, but we are concerned here with the evidence in this case.
Now mistaken identity has never been suggested.
The accused are all men of the same village and the eye witnesses know them by name.
The murder took 151 place in daylight and within a few feet of the two eye witnesses.
If the witnesses had said, "I know there were five assailants and I am certain of A, P and C.
I am not certain of the other two but think they were D and E", a conviction of A, B and C, provided the witnesses are believed, would be proper, But when the witnesses are in no doubt either about the number or the identity and there is no suggestion about mistaken identity and when further, the circumstances shut out any reasonable possibility of that, then hesitation on the part of the Judge can only be ascribed, not to any doubt about identity but to doubt about the number taking part.
The doubt is not whether D and E have been mistaken for somebody else but whether D and E have been wrongly included to swell the number to five.
Again, it is possible for a witness to say that "A, B, C, D, E and others, some ten or fifteen in number, were the assailants".
In that event, assuming always that the evidence is otherwise accepted, it is possible to drop out D and E and still convict A, B and C with the aid of section 149.
But that again is not the case here.
No one suggests that there were more than seven; no one suggests that the seven, or any of them, were, or could be, other than the seven named.
Nor is it possible in this case to have recourse to section 34 because the appellants have not been charged with that even in the alternative, and the common intention required by section 34 and the common object required by section 149 are far from being the same thing.
In the circumstances, we find ourselves unable to allow the conviction to rest on the insecure foundations laid by the High Court.
We have accordingly reviewed the evidence for ourselves.
Mr. Sethi took us elaborately through it.
In our opinion, the learned Sessions Judge 's conclusions are right.
We are unable to agree with the learned Judges of the High Court that the testimony of the two eyewitnesses requires corroboration.
If the foundation 152 for such an observation is based on the fact that the witnesses are women and that the fate of seven men hangs on their testimony, we know of no such rule.
If it is grounded on the reason that they are closely related to the deceased we are unable to concur.
This is a fallacy common to many criminal cases and one which another Bench of this court endeavoured to dispel in Rameshwar vs The State of Rajasthan(1).
We find, however, that it unfortunately still persists, if not in the judgments of the courts, at any rate in the arguments of counsel.
A witness is normally to be considered independent unless he or she springs from sources which are likely to be tainted and that usually means unless the witness has cause, such as enmity against the accused, to wish to implicate him falsely.
Ordinarily, a close relative would be the last to screen the real culprit and falsely implicate an innocent person.
It is true, when feelings run high and there is personal cause ' for enmity, that there is a tendency to drag in an innocent person against whom a witness has a grudge along with the guilty, but foundation must be laid for such a criticism and the mere fact of relationship far from being a foundation is often a sure guarantee of truth.
However, we are not attempting any sweeping generalisation.
Each case must be judged on its own facts.
Our observations are only made to combat what is so often put forward in cases before us as a general rule of prudence.
There is no such general rule.
Each case must be limited to and be governed by its own facts.
This is not to say that in a given case a Judge for reasons special to that case and to that witness cannot say that he is not prepared to believe the witness because of his general unreliability, or for other reasons, unless he is corroborated.
Of course, that can be done.
But the basis for such a conclusion must rest on facts special to the particular instance and cannot be grounded on a supposedly general rule of prudence enjoined by law as in the case of accomplices.
(1) ; at 390.
153 Now what is the ground for suspecting the testimony of these two witnesses? The only other reason given by the learned High Court Judges is that they have introduced a false element into their story at the instigation of the police in order to save the "face" of the lambardars.
But if that is so, it throws a cloak of, unreliability over the whole of their testimony and, therefore, though it may be safe to accept their story where the corroborative element of the blood stained clothes is to be found, it would be as unsafe to believe, on the strength of their testimony, that at least five persons were present as it would be to accept that the ones who have been acquitted were present; and once we reach that conclusion section 149 drops out of the case.
We have carefully weighed the evidence of these women in the light of the criticisms advanced against them by Mr. Sethi, most of which are to be found in the judgments of the lower courts, and we are impressed by the fact that the learned Sessions Judge who saw them in the witness box was impressed with their demeanour and by the way they stood up to the crossexamination, and also by the fact that the learned High Court Judges appear to believe them to the extent that at least five persons were concerned.
Some of the accused have made general and sweeping statements to the effect that the prosecution witnesses are inimical to them but no one has suggested why.
In the long cross examination of these witnesses not a single question has been addressed to them to indicate any cause of enmity against any of the accused other than the appellants Dalip Singh and Battan Singh.
A general question was asked, and it was suggested that there was some boundary dispute between Mst.
Punnan 's husband and the accused Indar Singh and Kundan Singh but that was not followed up by other evidence and neither Kundan Singh nor Indar Singh suggests that there was any such dispute in their examinations under section 342, Criminal Procedure Code.
Kehar Singh says vaguely that he has inherited land which will pass to the line 154 of Rattan and Bawa if he dies without heirs but lie has made no effort to substantiate this.
The questions put in cross examination therefore remain just shots in the dark and leave the testimony of the two women unimpaired.
The first information report was made by Mst.
Pullnan (P.W. 2) herself.
It was made very promptly though this was attacked by Mr. Sethi.
It was made at 8 30 p.m. within 6 1/2 hours of the occurrence at a place 12 miles from the police station.
The victims did not die at once and it was only natural that Mst.
Punnan 's first thoughts should have been to tend them Next, she had to walk part of the distance and the rest she covered in a lorry, and above all she has not been cross examined regarding delay.
We consider that a report made within 61 hours in such circumstances is prompt.
Now the important thing about this report is that it names the seven accused, no less and no more, and from start to finish Mst.
Punnan has adhered to that story without breaking down in cross examination and without any attempt to embellish it by adding more names; and in this she is supported by Mst.
Charni (P.W. 11).
Next, the bloodstained clothes found on the persons of the four appellants afford strong corroboration as against them, and as two courts have believed the witnesses to that extent all we need do is to concentrate on the other three accused who have been acquitted in order to see whether there were seven persons as Mst.
Punnan says and to see whether the conclusion of the High Court that there were at least five present is sound.
We do not think the discovery of tile weapons can be, lightly excluded.
One set was pointed out by Jarnail Singh.
In itself that might not mean much but it is unquestionable corroboration as against Jarnail Singh unless the fact of discovery is disbelieved or is considered to be a fraud.
But that is not the finding of either court.
The first court, believes the evidence and the High Court does not disbelieve it but 155 considers the incident as of small probative value.
It may be in itself, but it is a corroborative element in the case of two witnesses who do not require corroboration and that makes it all the more safe to accept their testimony.
Next comes the discovery of another set of weapons by Sadhu Singh.
He was already implicated by reason of some blood stained clothes but the importance of the discovery in his case lies in the fact that the weapons were found in the field of Kehar Singh.
It is certainly a circumstance to be taken into consideration that these weapons should be found in the field of a man who was named from the start.
Then comes the fact that Mst.
Punnan (P.W. 2) not only named the various assailants in her first information report but stated exactly what sort of weapon each was carrying.
Here again she is consistent from start to finish except for an unessential difference in the case of Jarnail.
In the first information report she said he had a dang while in her evidence she says he had a lathi, but as a dang is a big lathi that is not a real discrepancy.
This, in our opinion, is impressive consistency, especially as it tallies in general with the postmortem findings.
Now the fact that weapons of this description, four stained with human blood, are discovered at the instance of two persons she has named from the beginning in the fields of others whom she has also named from the start certainly does not tend to weaken her testimony.
The only accused who is not in some way independently linked up with the testimony of these two women is Indar.
But when their stories find corroboration on so many important particulars we see no reason why they should be disbelieved as regards Indar, always remembering that these are not witnesses who require corroboration under the law.
In our opinion, the High Court was unnecessarily cautious in acquitting the other three accused when the learned Judges were convinced that at least five persons were, concerned, 156 We have taken into consideration the fact that the High Court considers that the portion of Mst.
Punnan 's story regarding the lambardars has been falsely introduced by the police, also that both courts 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 correctly named all seven accused as the assailants.
On that finding the conviction under section 302 read with section 149 can be sustained.
We accordingly uphold these convictions.
The acquittals in the other the cases will of course stand but the mere fact that these persons have, in our opinion, been wrongly acquitted cannot affect the conviction in the other cases.
On the question of sentence, it would have been necessary for us to interfere in any event because a question of principle is involved.
In a case of murder, the death sentence should ordinarily be imposed unless the trying Judge for reasons which should normally be recorded considers it proper to award the lesser penalty.
But the discretion is his and if he gives reasons on which a judicial mind could properly found, an appellate court should not interfere.
The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest possible reasons.
It is not enough for an appellate court to say, or think, that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate court but to the trial Judge and the only ground on which an appellate court can interfere is that the discretion has been improperly exercised, as for example where no reasons are given and none can be inferred from the circumstances of the case, or where the facts are so gross that no normal judicial mind would have awarded the lesser penalty.
None of these elements is present here.
This is a case in which no one has been convicted for his own act but is being held vicariously responsible for the act of another or others.
In cases where the facts are more 157 fully known and it is possible to determine who inflicted blows which were fatal and who took a lesser part, it is a sound exercise of judicial discretion to discriminate in the matter of punishment.
It is an equally sound exercise of judicial discretion to refrain from sentencing all to death when it is evident that some would not have been if the facts had been more fully known and it had been possible to determine, for example, who hit on the head or who only on a thumb or an ankle; and when there are no means of deter mining who dealt the fatal blow, a judicial mind can legitimately decide to award the lesser penalty in all the cases.
We make it plain that a Judge is not bound to do so, for he has as much right to exercise his discretion one way as the other.
It is impossible to lay down a hard and fast rule for each case must depend on its own facts.
But if a Judge does do so for reasons such as those indicated above, then it is impossible to hold that there has not been a proper exercise of judicial discretion.
Now the High Court do not consider these facts at all.
They give no reasons and dispose of the matter in one sentence as follows: "I would dismiss the appeals of the other four and accepting the revision petitions change their sentences from transportation to death.
" That, in our opinion, is not a proper way to interfere with a judicial discretion when a question of enhancement is concerned.
We are unable to hold that the discretion was improperly exercised by the learned Sessions Judge.
Whether we ourselves would have acted differently had we been the trial court is not the proper criterion.
We accordingly accept the appeals on the question of sentence and reduce the sentence in each case to that of transportation for life.
Except for that, the appeal is dismissed.
Sentence reduced.
Appeal dismissed.
| Before section 149 of the Indian Penal Code can be applied, the court must find with certainty that there were at least live persons sharing the common object.
This does not, however, mean that five persons must always be convicted before section 149 can be applied.
If the judge concludes that five persons were unquestionably present and shared the common object, though the identity of some of them is in doubt, the conviction of the rest would be good; but if this is his conclusion, it behoves him, particularly in a murder case where heavy sentences have been imposed, to say so with certainty.
Rameshwar vs The State of Rajasthan ([1952] S.C.R. 377) referred to.
The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest reasons.
It is not enough for the appellate court to say or think that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate court but to the trial judge, and the only ground on which the appellate court can interfere is that the discretion has been improperly exercised, as for instance where no reasons have been given and none can be inferred from the circumstances of the case or where the facts are so gross that no normal judicial mind would have awarded the lesser penalty.
|
Appeals Nos. 52, 53 and 54 of 1950.
Appeals from the Judgment and Decree dated the 7th March, 1949, of the High Court of Judicature at Bombay in Appeals Nos. 55 and 54 of 1948, arising out of Decree dated the 29th July, 1948, of the said High Court in its Ordinary Original Civil Jurisdiction in Suits No. 336 of 1945 and No. 786 of 1948.
G.S. Pathak (H. J. Umrigar and P. N. Mehta, with him) for the appellant in Civil Appeals Nos. 52 and 54 and respondent in Civil Appeal No. 53, 119 M. C. Setalvad, Attorney General for India (J. B.Dadachanji, with him) for the respondent in Civil Appeals Nos. 52 and 54 and appellant in Civil Appeal No. 53. 1953.
May 19.
The Judgment of the Court was delivered by MAHAJAN J.
These appeals, though they arise out of two different suits, 336 of 1945 and 786 of 1948, can be disposed of by a common judgment, as both these suits were instituted in effect to obtain the same relief.
In July, 1944, a struggle commenced between the group of Sir Padampat Singhania and the group of Shri Maneklal Prem Chand for control of the management of the Bombay Life Assurance Co. Ltd. and there was a race for the acquisition of the shares of the company between the two groups.
Sir Padampat, the appellant in Civil Appeal No. 54 of 1950, and respondent in the cross appeal No. 53 of 1950, on the 25th July, 1944, purchased through Shri P. N. Gupta, his Bombay agent, 667 shares of the company, 484 out of which belonged to Mr. Reddy, the appellant in C.A. No. 53 of 1950 and respondent in Civil Appeal No. 54 of 1950.
This deal was made on his behalf by a firm of share and stock brokers, Bhaidas Gulabdas.
The shares were sold at the rate of Rs. 300 per share.
On the 29th July, Gupta executed a receipt in favour of Bhaidas Gulabdas acknowledging the receipt of these shares, while Bhaidas Gulabdas as constituted attorneys of Mr. Reddy executed five blank transfer forms in respect of the 484 shares sold by them four for 100 shares each, and one for 84 shares.
It is alleged that these transfer forms were ultimately filled in the name of Sir Padampat Sin ghania.
Sir Padampat, however, made no application to the company for registration of his name in the register of shareholders till the 11th April, 1945.
On an application being made, the company declined to register the shares in his name and intimated to him their refusal to do so on the 8th May, 1945.
120 On the 8th January, 1945, the company, in order to combat the move of Sir Padampat to acquire control of its management, made an application under rule 94 A of the Defence of India Rules for sanction for the issue of further capital.
The sanction was granted and the company was authorised within a time limit of six months to increase its capital by a sum of Rs. 4,59,600 by issuing 4,596 shares; otherwise the sanction was to lapse.
On the 21st February, 1945, the directors of the company passed a resolution increasing the capital of the company by issuing these 4,596 shares of Rs. 100 each at a premium of Rs. 75 per share.
On the existing shares only Rs. 25 per share had been called up.
The company therefore decided that the new shares should be offered to the existing shareholders, in the proportion of four shares to every five shares held by the shareholders.
Reddy as a shareholder of 534 shares (including 484 shares sold by him on 25th July, but yet not registered in the transferee 's name) thus became entitled to 427 new shares and one fractional certificate.
Out of the 427 new shares offered to him he was entitled to 40 shares in his own right which appertained to 50 unsold shares which he still held in the company.
The other 384 shares appertained to the shares that he had sold.
The company issued a circular letter to every shareholder giving the details of the offer made and along with it sent two forms, A and B. Form A being the application form for allotment of new shares, the shareholder had to subscribe his name to it and return it to the company for allotment of the shares offered accompanied with a cheque for the amount that had to be paid for obtaining the shares.
Form B was a renunciation form.
In case a shareholder did not want all or any of the shares offered to be allotted to him, he was allowed to renounce his right in favour of some other person.
On the 21st February, 1945, Reddy returned to the company form A duly filled in, requesting, the company for allotment of 40 shares out of the new issue, 121 which appertained to the 50 shares he still held in the company.
In respect of the balance of 384 shares offered to him and which appertained to the 484 shares sold by him he said nothing.
The renunciation form was retained by him.
On the 23rd February, 1945, Messrs. J. L. Mehta and N. K. Bhartiya purporting to act on behalf of the purchasers of 484 shares wrote to Reddy asking him to forward to them the, company 's circular letter along with forms A and B as and when received by him, after appending to them his signatures, to enable them to apply for these shares either in Mr. Reddy 's name or in the name of, the transferees.
He was told that he was to hold the shares offered when acquired as a trustee for them.
On the 28th February, 1945, Messrs. Craigie, Blunt & Caroe, a firm of solicitors, also acting on behalf of the purchasers, wrote to Mr. Reddy a letter to a similar effect.
This was prefaced with the remark that the offer of fresh shares by the company was illegal.
Without prejudice to that contention, Mr. Reddy was called upon to apply for the newly offered shares and obtain them on their behalf or to send them the application form (A) and the renuniciation form (B) and the fractional certificate to enable them to obtain the new shares offered which appertained to the 484 shares sold by him.
The relevant part of this letter reads thus: "We are instructed by our clients, the parties to whom you, sold these shares,Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others to call upon you to apply for the additional shares and fractional certificates now issued to which you have become entitled, and to let us know when you have done so.
When allotted to you, you will hold these shares on their behalf and please then hand them to the Hindustan Commercial Bank Ltd., Apollo Street, Fort, Bombay, who will pay you the sum of Rs. 100 for every share allotted to you, which should be accompanied by blank transfer form signed by you as the transferor and the form of renunciation unsigned.
They will also pay you the, 122 Proportionate sum on any fractional certificate to which you are entitled on handing over the same to the bank in blank unsigned on or before the 7th March, 1945.
If you prefer to do so, please send the form of application 'A ' duly signed by you as well as the renunciation form 'B ' as also the fractional certificate and the relevant application attached thereto unsigned in blank to our client, Mr. N. K. Bhartiya at Second Floor, Rahimtoola House, Homji Street, Fort, Bombay, so as to reach him before the 7th March, 1945, and he will then forward the application to the company on your behalf along with the necessary remittance.
Our clients agree to indemnify you against any and every liability which you will incur by applying for the partly paid shares.
We are instructed to point out that you are a trustee for our clients by virtue of the fact that you have sold your shares in this company to them pending our clients ' name being entered on the register in respect of the shares which you have sold to them and that you are bound to comply with our clients ' request.
" The Hindustan Commercial Bank Ltd. also wrote a letter to Mr. Reddy on the 1st of March, 1945, which reads thus : "With reference to a circular dated the 28th February, 1945, issued by Messrs. Craigie, Blunt and Caroe on behalf of their clients Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others, we have instructions to pay you in respect of all shares of the abovenamed company in the new issue that you deliver to us at Rs. 100 per share, when such shares are allotted to you in exchange for the allotment letters or share scrips with a duly signed transfer deed.
We have also instructions to pay you at Rs. 20 per fractional certificate delivered to us on or before the 7th March, 1945.
Please note that we shall do the same if the shares and/or fractional certificates are delivered to us in terms of the circular mentioned above.
You may send these to us through any 123 bank and the exchange commission will also be paid by us.
" These letters indicate that the persons named therein with some undisclosed persons were the purchasers of the shares sold by Reddy and they were the equitable owners of the shares, in spite of the original bargain having been made by Sir Padampat.
It was not disclosed in these letters that the persons named therein were mere nominees or benamidars of Sir Padampat.
One fact however is beyond dispute that the names of these persons were not entered in the blank transfer forms in the column of transferee, and eventually it was the name of Sir Padampat alone that was entered therein.
Mr. Reddy replied to all these communications received by him on the 3rd March, 1945, in the following terms: "With reference to all these communications, I have to state that nearly eight months have elapsed since I sold the shares and the shares are not as yet transferred to the names of the purchasers.
I have no objection to give the renunciation forms, duly signed in favour of the real and true purchasers.
As regards the requisition made by you in paras.
4 and 5 of the circular letter of 28th February, 1945, 1 fail to understand as to how I am under an obligation to comply with it.
I am ready and willing to sign renunciation form in favour of the true purchasers, on my being satisfied that those who are described as the purchasers of my shares are the real and true purchasers of those shares by their producing the transfer forms given by me duly executed by them along with the share certificates.
" Whatever else may be said about the attitude of Reddy, he was certainly entitled to know the name of person or persons who were the real purchasers of the shares sold, because he could only respect and comply with the requisition made by those persons and those persons alone and by none else.
Not satisfied with this reply and in view of the fact that the last date for making the application for the issue of additional shares 124 was to expire on the 10th March, Sir Padampat instituted suit No. 336 of 1945 on the 8th March, 1945, on the Original Side of the Bombay High Court, inter alia, for the following reliefs against Mr. Reddy as the sole defendant.
The company was not impleaded in this suit.
That the defendant may be ordered to send and deliver to the plaintiff the application form A annexed to the circular letter for the number of additional shares allotable to him, as also the fractional certificates and the application relating thereto (unsigned and in blank) upon the plaintiff paying to him such sum as this honourable court may direct and/or upon the plaintiff giving such indemnity as this hon 'ble court may deem proper; 2.
That the defendant may be ordered upon receiving the certificates of the new shares to hand over the same as also the fractional certificates to the plaintiff together with transfer forms in blank duly signed by him." On the 7th December, 1945, the plaint was amended and an alternative relief for a decree for Rs. 7,29,600 by way of damages was included therein.
It was averred in the plaint that upon the sale by defendant of 484 shares the plaintiff became the beneficial owner of those shares and the defendant became a trustee for him of all rights and benefits whatsoever appertaining or accruing to the said shares, that one of such rights was the right and opportunity to apply for shares forming part of the new issue, that the defendant was bound to do all lawful acts in relation to and for the purpose of securing the said benefits for the plaintiff and which the plaintiff might call upon him to do, on terms of the plaintiff indemnifying him against all the consequences thereof, and that the plaintiff was ready and willing to do the same.
It was further alleged that unless the plaintiff 's rights were safeguarded by the 10th March, 1945, which was the last day for making application for the shares, he will be irretriev ably prejudiced.
Ail application was made for the appointment of a receiver of the application form and 125 letterof renunciation and of the rights of Reddy in the new issue of shares.
On the same day Bhagwati J. made an order under Order XL, rule 1, of the Civil Procedure Code, appointing the court receiver, interim receiver of the application form and letter of renunciation and of the rights, if any, of the defendant in the 384 shares of the Bombay Life Assurance Co. Ltd. The receiver was given power to exercise all the rights of the defendant in respect of the said shares on the plaintiff giving the usual undertakings.
On the 10th March, 1945, the receiver made a request to the company for the allotment to him of 384 shares of the new issue appertaining to the 484 shares standing in Reddy 's name in the company register and sold by him on the 25th July, 1944.
This application was accompanied by a remittance of Rs. 38,400 payable on these shares according to the resolution of the board.
The company was requested to register the name of the receiver in the register of members in respect of these shares.
On the 30th April, 1945, the company intimated to the receiver that his application for allotment of shares was considered by the board of directors in a meeting held on the 21st April, 1945, and it was resolved to reject the same because Reddy had accepted the company 's offer only to the extent of 40 shares and the offer regarding the balance had lapsed.
The result was that the company refused to register the name of the receiver in respect of the new shares on the 30th April, 1945, and it also refused Sir Padampat 's application for registering his name as transferee in respect of the 484 shares of Reddy purchased by him which might have entitled him to retain the new shares in his own name.
Sir Padampat having thus failed in getting the newly issued shares regis tered in the name of the receiver had no alternative left but to fight out the suit already instituted against Reddy.
He also had another suit instituted to obtain practically the same reliefs which were claimed in his own suit, by the receiver against the company with the leave of the court, namely, suit No, 786 of 1948.
18 126 This suit was filed on the 8th March, 1948, after the lapse of about three years of the company 's rejection of the receiver 's application.
It was explained in paragraph 14 of the plaint that the suit had not been filed earlier as the validity of the issue of the new shares 'was being challenged in suit No. 347 of 1945.
The prayer in this suit was that the defendant company be ordered to allot to the plaintiff 384 shares mentioned in the application and to put his name on the share register of the company for the said shares.
Both the suits were heard by Bhagwati J., who delivered one judgment in both of them and substantially granted the reliefs claimed in both the suits.
It was held by the learned judge that the 484 shares which Reddy had sold through Bhaidas Gulabdas had been purchased by Sir Padampat, that as trustee of these shares he as vendor was also a trustee of all.
property rights annexed to the shares and that it was the duty of Reddy, when called upon to do so by Sir Padampat on proper safeguard and indemnity for payment, to transfer to Sir Padampat all the benefits which he derived by the issue of the new shares by virtue of his being their legal owner.
It was further held that a proper requisition had been made by the beneficial owner on the trustee to obtain for him these shares and that the trustee defaulted in his duty in not complying with that requisition and that the company was also in error in refusing the application of the court receiver for registration of his name as a shareholder in respect of the new shares on the ground that Reddy having applied for 40 shares, his right to obtain the remaining shares had lapsed.
It was argued on behalf of the company that the sanction given by the examiner of capital issues having lapsed, no relief could be given against the company and it could not be ordered to allot shares to the plaintiff as there was no available capital which could be issued.
Bhagwati J. however took the view that the plaintiff could not be deprived of his rights by reason of this circumstance.
In the result he ordered the company to comply with the order and allot within three 127 months 384 shares to the plaintiff after obtaining a fresh sanction for the same from the authority concerned.
Before concluding the learned judge said that issues 10 and 11 had not been argued before him and the contentions raised therein seemed to have been abandoned and that even otherwise there was no merit in them.
Against this common judgment in both the suits, Reddy and the company preferred separate appeals.
The appeal Bench of the High Court allowed the company 's appeal and dismissed the receiver 's suit on the finding that the court receiver was not entitled to the allotment of the new shares in his own name as such.
Civil Appeal No. 52 of 1950 has been preferred against this decision.
In suit No. 366 of 1945 Reddy 's appeal was allowed to the extent that the plaintiff was held disentitled by the reason of lapse of the sanction to reliefs (A) and (B) granted to him by Bhagwati J.
It was however held that he was a trustee of Sir Padampat in respect of the shares of the new issue and he having failed to apply for the new shares was liable to him in damages and the fact that he made an application in respect of 40 shares did not disentitle him to make another application in respect of the 384 shares.
It was also held that a proper requisition had been made by the beneficiary upon the trustee to carry out the trust and he had defaulted in complying with the requisition.
The suit was accordingly remanded to the trial judge for assessing damages.
The principal questions involved in the appeals are: (a)Whether on the facts and circumstances of this ease Reddy was under a legal obligation as a trustee to apply for and obtain on behalf of Sir Padampat 384 new shares which appertained to the shares sold by Reddy to Singhania; (b)whether the requisition made on Reddy by Messrs. Craigie, Blunt & Caroe by their letter dated 3rd March, 1945, was sufficient in law to call upon him to apply for shares of the new issue and whether Reddy committed default as a trustee in not complying with this requisition; 128 (c)whether the conduct of Sir Padampat in not lodging 484 shares for transfer to his name till April, 1945, disentitled him to the reliefs claimed by him; (d)whether the receiver was not entitled to make the requisition and was not the proper person to apply for the new shares in his own name, and whether the company was under no obligation to allot to him the shares; (e)whether the plaintiff was entitled to reliefs (A) and (B) of the plaint in the altered situation of the company.
It has been held in the courts below that Sir Padampat became on the 29th July, 1944, the sole beneficial owner of 484 shares sold by Reddy, the legal title to which was vested in him.
That having been found, the relation of trustee and cestui que trust was thereby established between them.
All that is necessary to establish such a relationship is to prove that the legal title was in the plaintiff and the equitable title in the defendant.
The fact that such a relationship qua the 484 shares sold by Reddy existed between the parties to the suit was not disputed by the learned AttorneyGeneral appearing for Reddy, but he contested the view of the High Court that the cestui que trust could not on any principle of equity or law call upon the trustee to bear his burdens and ask him to obtain on his behalf new shares of the company or make further investments in its capital which would involve in its train new obligations and fresh burdens.
As observed by Lord Lindley in Hardoon vs Belilios(1) the plainest principles of justice require that cestui que trust who gets all the benefit of the property should bear its burden unless be can show some good reason why his trustee should bear them himself.
Mr. Pathak did not contest the proposition that Singhania had any right as a beneficial owner of 484 shares to throw on Reddy any of the burdens incidental to the ownership of those shares.
He conceded that Reddy as a trustee had a right to be indemnified by his cestui que trust against calls.
The proposition is well recognised and (1) ; 129 the liability is enforced on the principles applicable to the equitable ownership of property.
Once it is held established that Reddy was a trustee of the 484 shares sold by him, he as holder of those shares must also be held to be a trustee of all the property rights annexed to the shares.
It was conceded that he was not only the trustee of the corpus but also the trustee of the income and of the dividends that he may receive and that he was bound to pay them over to the beneficiary.
In E.D. Sassoon & Co. Ltd. vs Patch(1) Pratt J. held that under section 94 of the Indian Trusts Act a transferor holds the shares for the benefit of the transferee to the extent necessary to satisfy its demands and that as the transferee holds the whole beneficial interest and transferor has none, the transferor must comply with all reasonable directions that the transferee may give and that in this situation if he becomes a trustee of dividends he is also a trustee of the right to vote because the right to vote is a right to property annexed to the shares and as such the beneficiary has a right to control the exercise by the trustee of the right to vote.
The learned AttorneyGeneral did not combat the view expressed by Pratt J., but he objected to any further extension of the rule therein laid down.
The question that needs our decision is bare of authority.
The English law can furnish no guidance for its solution as there is no provision corresponding to section 105 (C) in the English Companies Act.
In India this is the first known occasion when a situation like this has arisen between a transferor and transferee of shares on a stock exchange transaction.
The proposition therefore that has been canvassed in this case has to be decided on first impressions and on general principles of equity.
Section ' 105(C), the enactment of which has conferred certain rights and privileges on a shareholder which he did not possess before its enactment is in these terms: " Where the directors decide to increase the capital of the company by the issue of further shares such shares shall be offered to the members in proportion to (1) 130 the existing shares held by each member and such offer shall, be made by notice specifying the number of shares to which the member is entitled and limiting a time within which the offer, if not accepted, will be deemed to be declined ; and after the expiration of such time, or on receipt of an intimation from the member to whom such notice is given that he declines to accept the shares offered, the directors may dispose of the same in such manner as they think most beneficial to the company.
" This section limits the powers of the directors to dispose of the further issue of capital in any manner that they may think most beneficial to the company.
They are under a mandate to offer these shares in the first instance to the members in proportion to the existing shares held by them.
In other words, a member becomes entitled under the provisions of this section by reason of his being the holder of a certain number of shares in the company, to obtain shares in the further issue of capital as of right.
This is not a fruit of stock ownership, in the nature of a profit, nor does it amount to a division of any part of the assets of the company.
It is not an organic product of the original stock like the young of animals or the fruit of trees, but, as described by the Supreme Court of America in Miles vs Safe Deposit Trust Co.(1) this right to subscribe to new stock is but a right to participate in preference to strangers and on equal terms with other existing shareholders in the privilege of contributing new capital called for by the corporation an equity that inheres in stock ownership under such circumstances as a quality inseparable from the capital interest represented by the old stock.
The exercise of the privilege depends on the option of the shareholder.
If he likes, he can invest further money and purchase a proportionate share, of the new issue of capital.
He is of course not obliged to do so.
He has also the right to assign the offer made to him in favour of any other person but in that event the directors have the option to allot or not to allot the (1) 66 Law.
Edition 903 at 026.
131 shares to the person in whose favour the share holder renounces the shares offered to him.
The offer, of course, creates fresh rights but it also brings in its train liabilities and obligations.
It confers the right on a shareholder to purchase shares in the new issue of capital in proportion to his existing shareholding, but in order to obtain that right he has to fulfil certain obligations and he has to incur certain liabilities.
In the first instance, if he decides to invest his money in the further capital issued, he has to make an application to the company for the allotment of shares so offered and with his application he has to remit to the company the amount of the application money.
That having been done, if the shares offered are only partly paid up, as they were in this case, he incurs on allotment the further liability of meeting any future calls on these shares.
Can it be said in this situation that a transferor of a certain number of shares who being the legal owner of those shares and the beneficial interest of which vests in the cestui que trust, is liable for all the payments and obligations attaching to the new issue of shares and is bound to act in both respects for the benefit of the cestui que trust; in other words, whether he is under a duty, when so instructed by his beneficiary, to make an application for the new issue of shares offered under the provisions of section 105 C and obtain them in his name by making the necessary payment and by incurring the consequential obligations.
Plainly put, the question may be posed thus: whether the obligation of a transferor of a certain number of shares as a trustee extends also in respect of the right to acquire further shares issued by the company on behalf of his cestui que trust by putting himself on the register of shareholders in respect of the new shares regarding which.
he may have to incur fresh liabilities and obligations which were not existing at the time when he made the transfer.
Mr. Pathak contended that as the right to obtain new shares was inseparable from the ownership of the old stock, the transferor of the old stock held the option to buy new stock in like manner as he held the 132 original stock, and if qua the old stock he was a trustee for the beneficial owner, in the like manner he was a trustee also of the right or the option to buy new shares and was bound to exercise it for the benefit of the cestui que trust and according to his directions, and was bound to obtain new shares in his own name for the cestui que trust.
Reliance was placed for this proposition on certain observations of Buckley J. in Biss vs Biss(1).
In that case, a lessor granted a lease for seven years of a house in which the lessee carried on a profitable business.
On expiration of the term of the lease, the lessor refused to renew the lease, but allowed the lessee to remain as a tenant from year to year on increased rent.
During the tenure of the lease, the lessee died leaving a widow and 3 children, one being an infant.
The widow and a son each applied to the lessor for a new lease for the benefit of the estate, which the lessor refused to grant.
Having determined the yearly tenancy by notices the lessor granted to the son personally a new lease for 3 years.
In an action already instituted by the children against the administratrix, namely, the widow, she applied to have the new lease treated as being taken by the son for the benefit of the estate.
Buckley J. held that the son was a trustee of the new lease for the benefit of the estate.
The Court of Appeal reversed this decision and held that the right of renewal had been determined by the lessor long before the son intervened, and that the new lease could not be regarded as an accretion to the estate and the son was entitled to retain the lease and that he had not abused his position in any way.
This case therefore is no authority for the proposition before us, and the Court of Appeal did not say anything on the point.
Buckley J. however in the course of his judgment observed as follows: "It is, of course, very familiar law that if a trustee obtains a renewal of a lease of property vested in him as trustee, whether by virtue of a right of renewal or not, he must hold the new lease for the benefit of his cestui que trust.
The leading authority upon that is (1) [1903] 2 Ch .
133 Keech vs Sanford (1).
The principle is that the trustee owes it to his cestui que trust to obtain a renewal, if he can do so, on beneficial terms, and that the court will not allow him to obtain a renewal upon beneficial terms for himself when his duty is to get it for his cestui que trust.
" Reliance was also placed on certain observations of Neville J. in Jones vs Evans(2).
That was a case where the capital of a company was divided into 10,000 shares of pound 10 each, of which 3,728 only had been issued and were fully paid up.
The company was very prosperous and the market value of the shares was pound 30 each.
The reserve fund of the company exceeded pound, 50,000.
The directors proposed a scheme for distribution of the reserve fund representing accumulated undivided profits amongst the shareholders, so that every shareholder was to get a bonus of one new fully paid up share of pound 10 for every existing share held by him.
Accordingly resolutions were passed by the company empowering the directors to declare a bonus dividend out of the reserve fund and sanctioning the distribution of a bonus dividend of pound 10 per share out of the reserve fund and authorising the further issue of 3,728 shares of pound 10 each out of the unissued capital of the company to be allotted pro rata amongst the existing shareholders and directing that such new shares be paid up in full forthwith.
The directors sent a circular letter to every shareholder with a warrant for the bonus divident on his shares, informing him of an allotment to him of his proportion of the new shares and giving him an option to accept or refuse the allotment, and stating that if he accepted the allotment he was to indorse and return the dividend warrant to the company to be applied in payment of the new shares.
Trustees of a testator 's will held 200 shares of the company, and on receipt of the circular letter accepted their allotment of 200 new shares, indorsed and returned their bonus dividend warrant for pound 2,000, and afterwards sold the new shares (1) (1726) Sel.
(2) 134 at a profit.
The question then arose whether, as between the tenants for life and remainderman under the will, the bonus dividend was capital or income.
It was held, on the evidence, that the company intended to capitalize the reserve fund and not to distribute it as a bonus dividend, and therefore the whole of the bonus dividend was capital of the testator 's estate.
In the concluding portion of his judgment, Neville J. said as follows: ". . when I say that the option vested in each shareholder, either to take the dividend and keep it, or to return it and get the greater benefit which the company offered if be did, I do not think that is true in the case of trustees; because it seems to me that, if by taking pound 10 in cash, when they were offered by the company a share worth E 20 if they would return it, it would be a wilful default on their part if they refused and took less, and consequently their cestui que trust would be entitled to insist upon the trustees taking the greatest benefit which the company offered.
Therefore, in the case of trustees it seems to me that, although as between the company and them there may be a right to elect, between them and their cestui que trust there is no such right, and they must take the dividend in what I will call the capitalized form.
" On the basis of these authorities, Mr. Pathak contended that his client as a beneficiary was entitled to the fullest benefit conferred on the old shares by reason of the new offer and that he was entitled to compel the trustee to act in a manner which would enable him to obtain the benefit.
In our opinion the observations made in these cases cited above must be limited to the facts of those cases.
We are here dealing with a trustee with peculiar duties and peculiar liabilities, and it is a fallacy to suppose that every trustee has the same duties and liabilities.
In none of the cases cited by Mr. Pathak was there any question of the trustees incurring any personal pecuniary liability.
In the case of Biss vs Biss(1), the question was obtaining the benefit of renewal of a (1) 135 lease, and the trustee had to incur no fresh liability for obtaining it.
On the other hand, a prosperous business was being conducted in those premises and the renewal of the lease was obviously for the benefit of the lessee and carried with it no new or onerous obligations.
In Jones vs Evans (1), the trustee had incur no liability of any kind whatsoever.
That only question there was whether he should exercise the option of receiving the dividend or of converting the bonus into the shape of capital.
It is part of the general law of trust that a trustee must act in a manner most beneficial to the cestui que trust and he can retain no benefit to himself from the corpus of the trust estate or from anything that accrue to that estate subsequently.
None of these cases death with a situation like the one that has arisen in the present case.
If the newly offered shares were fully paid up and no liability was attached to them, there is no question that the trustee would have been bound to obtain them for the benefit of the cestui quo trust.
The cases referred to therefore go only so far and no further.
We see no principle of equity or on general law which obliges a trustee to buy new shares in his own name for the benefit of the cestui que trust, when in so doing he has to bear a heavier pecuniary burden than he undertook to bear as constructive trustee by reason of the sale of his shares in favour of the cestui que trust and which relationship was contemplated to last only till the time when the shares sold could not be registered in the name of the transferee.
Of course, if the trustee of his own volition chose to obtain the new shares which appertain to the shares already sold by him, on principles of equity it could not be denied that the cestui que trust would have been entitled to call upon the trustee to hand over those shares to him on receipt of the amount spent by the trustee; but if the trustee of his own volition is not prepared to obtain those shares in his own name, it is difficult to see on what principle of law or equity he can be forced to make an application for obtaining those shares in his own name, and then pass (1) 136 them over to the cestui que trust after obtaining the amount spent by him or after being otherwise fully indemnified in respect of the payments made or to be made, or liabilities incurred or to be incurred in future.
It is difficult to conceive any principle of equity which obliges a person in the position of a constructive trustee in respect of X number of shares to also become a constructive trustee in respect of in additional, say, Y number of shares and thus become a trustee of X plus Y shares.
Such a burden is not a necessary consequence or an incident of the original transaction of purchase and sale of shares or of the legal relationship of trustee and cestui que trust thus created.
That relationship arises by reason of the circumstance that till the name of the transferee is brought on the register of shareholders in order to bring about a fair dealing between the transferor and the transferee equity clothes the transferor with the status of a constructive trustee and his obliges him to transfer all the benefits of property rights annexed to the sold shares of the cestui que trust.
That principle of equity cannot be extended to cases where the transferee has not taken active steps to get his name registered as a member on the register of the company with due diligence and in the meantime certain other privileges or opportunities arise for purchase of new shares in consequence of the ownership of the shares already acquired.
The trustee can very well say to any request made by the cestui que trust for the acquisition of new shares that he is not prepared to put his name on the register of members for any Additional shares, particularly when the acquisition of those shares involves him in further liabilities.
In our judgment therefore neither on principle nor on authority can it be held that Mr. Reddy could be forced to acquire in his own name 384 shares which appertain to the 484 shares sold by him to Sir Padampat.
All that Sir Padampat could call upon Reddy to do was to sign he renunciation form in his favour of the shares offered put of the new issue appertaining to the old shares and after having obtained the renunciation form, to make an application in his own name for the purchase of those shares.
This view can be sustained on the intelligible principle that the transferor as a constructive trustee in respect of the shares sold by him cannot retain any benefit himself of the new issue which is annexed to the shares sold by him and if any benefit arises out of that offer made under section 105 C, that benefit must go to the beneficiary, but more than that the beneficiary is not entitled to call upon the trustee to do.
Mr. Pathak reiterated the argument that had been accepted by the High Court that if the only duty of Reddy was to transfer the offer made to him under section 105 C to Sir Padampat after signing the renunciation, then in that case Sir Padampat could not get the full advantage of that offer because in that event the directors were not bound to allot the shares to the person in whose favour they have been renounced by the shareholder, while on an application made by the shareholder they were bound to allot him the shares offered.
That disadvantage is certainly there but it has to be borne in mind that the relationship of constructive trustee and cestui que trust created on principles of equity cannot be extended ad infinitum in respect of all future acquisitions of rights annexed to the shares sold which acquisitions may involve not only rights but liabilities and obligations which the constructive trustee may not be prepared to undertake, and in this situation the cestui que trust may not be able to get all the benefits of the fresh incidents annexed to the ownership of the shares that he had purchased.
He himself may be blamable for the loss that be may have thus to suffer by his not having made an application in time for getting himself registered on the register of members and for not having taken proper steps in law for getting his transfer recognised by the company if the request made by him has already been refused by the company.
The equitable principle on the basis of which the legal relationship between the transferor and the transferee arises cannot be worked in a manner so as to prejudice the 138 position of the constructive trustee and make him an accounting party in respect of all privileges or fresh offers that may be annexed to the shares sold for all time to come.
Mr. Pathak urged that his client was prepared not only to pay the application money and the allotment money to the trustee but was further prepared to indemnify him against any future calls on those shares.
It has to be remembered that even the original 484 shares sold by Reddy to Sir Padampat were partly paid up shares and Reddy was liable to pay the amount of any call made on those shares, subject to being indemnified when the time arose by Sir Padampat for the amount paid on those shares.
If Mr. Pathak 's contention is accepted, then Reddy will also become further liable for future calls on the new 384 shares.
He would be entitled only to claim indemnity when an occasion arose.
It is well settled that a trustee is not entitled to claim indemnity till he suffers an injury for which he has to be indemnified.
But the fact remains that the liability to pay calls is for the time being his liability and not that of the cestui que trust.
Once his name is entered on the register of shareholders, a mere right to claim indemnity may, in a case like the present, when the time to claim it arises, prove to be merely illusory.
The shares may go down in value, the company may go in liquidation, or the financial position of the equitable owner of the shares may deteriorate.
In all these situations, the right of the trustee to be indemnified in respect of fresh liabilities accruing on the shares would be, as already stated, merely chimerical, and the trustee would have to incur in those situations personal pecuniary liability on account of the shares.
Therefore, the contention that the trustee is bound to buy the new shares in his own name for the benefit of the cestui que trust is not well founded, because it involves in its train pecuniary liabilities which the trustee may have to incur personally and which he is not bound to undertake under any system of law for the benefit of the cestui que trust.
We thus hold that Sir Padampat was not 139 entitled to call upon Reddy to make an application in his own name for the acquisition of the newly issued shares by investing his own money in the first instance and then recovering it from Sir Padampat or by signing the application form and sending it to Sir Padampat for acquiring the shares in his name.
All that he was entitled to was to call upon him to send him the renunciation form.
This Reddy was prepared to do and offered to do so provided the names of all the persons in whose favour renunciation had to be made were disclosed to him.
Admittedly this was never done and Sir Padampat could not gain his object by merely having the renunciation form, because the directors of the company in the circumstances of this case would never have granted his application, if made in his own name on the basis of the renunciation form signed by Reddy.
Sir Padampat 's or the receiver 's suit therefore in this view of the case could not have been decreed.
On the view expressed above, both the suits must fail.
If Sir Padampat had no right to call upon the trustee to buy the newly offered shares in his own name for his benefit, a fortiori, the receiver appointed by the court had also no such right, and on this short ground the claim put forward in both the suits has to be negatived.
We are further of the opinion that even if it was held that Reddy was under a duty to sign the application form and the renunciation form and send them over to Sir Padampat to enable the latter to obtain the newly offered shares in Reddy 's name, the requisition that was made on his behalf directing the trustee to purchase these shares and to exercise the option was ineffective and inadequate.
On the basis of that requisition, it was not possible for the trustee to carry out the mandate of the cestui que trust, and, that being so, on this ground also, the plaintiff was disentitled to relief in the two suits.
The first requisition made by Messrs. J. L. Mehta and N. K. Bhartiya on the 23rd February, 1945, was made on their own behalf only and not on 140 behalf of Sir Padampat.
It called upon Mr. Reddy to forward the circular letter with his signatures on the forms annexed to the letter, to enable them to apply for the newly offered shares either in his name or in their or such other names as might be decided upon by them.
This requisition was not considered adequate by the High Court and was left out of consideration.
Mr. Pathak also did not place much reliance upon it.
Both the courts below and Mr. Pathak however placed reliance on the requisition made on the 28th February, 1945, in the letter of Messrs. Craigie, Blunt & Caroe cited in the earlier part of this judgment.
In that letter, it was stated as follows "We are instructed by our clients, the parties to whom you sold these shares, Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others to call upon you to apply for the additional shares and fractional certificates now issued. . " This requisition therefore purports to have been made on behalf of 4 disclosed beneficiaries and some other undisclosed cestuis que trust.
It was not asserted in this letter that the real purchaser of the shares was Sir Padampat Singhania and the other persons mentioned therein were merely his agents or benamidars.
Moreover, it did not disclose the names of all the beneficiaries.
Legitimately, therefore, in his letter of the 3rd March, 1945, Mr. Reddy said that he was ready and willing to sign the renunciation form in favour of the true purchasers, on his being satisfied that those who are described as the purchasers of his shares are the real and true purchasers by perusing the transfer forms duly executed by them along with the share certificates.
It is difficult to understand how a requisition made on the trustee by some disclosed and other undisclosed beneficiaries could be regarded as a proper direction to him, which he could be called upon to obey.
This requisition was therefore faulty in this respect, and the trustee could not be said to have defaulted in his duty in not carrying out 141 such a requisition.
Again, the indemnity offered in the requisition is merely illusory, because in the letter the extent of the liability of each beneficiary, whether known or unknown, is not mentioned, and the trustee could not ascertain from its contents the name of each and every person liable for his claim for indemnity as and when the occasion for it arose, or its extent.
A mere bald statement in the following words "Our clients agree to indemnify you against each and every liability that you incur by applying for these partly paid up shares" was in our opinion wholly inadequate.
The matter may have been different if along with this requisition a bank guarantee safeguarding the trustee in regard to his future liabilities had been sent to him as well as a cheque for the money required to be paid at the time of making the application.
We are also of the opinion that in view of the allegations made in the plaint and in view of the fact that all the share transfer forms were subsequently signed by Sir Padampat Singhania alone, this requisition cannot be said to have been made on behalf of the plaintiff and on the basis of it he cannot be heard to say that he made a proper requisition on the trustee which the latter failed to carry out and was therefore liable to him in damages for not carrying out his directions.
It is significant that no mention is made in the plaint as to how the names of the persons contained in the letter of the 28th February came to be mentioned therein, and how the requisition was made on their behalf when they had never signed the blank transfer forms.
It may also be observed that it was left to the option of the trustee to pay from his own pocket the application money, and then recover it from the bank.
Such a demand could not be made on a trustee and he could not be asked to invest his own money for the benefit of the cestui que trust.
The trustee was under no obligation to find a heavy sum of money and to invest it on the purchase of new shares for the benefit of the cestui que trust, and to recover the amount after having invested it in them.
What the letter of the solicitors in fact intended to 20 142 convey to Reddy was: "Pay yourself and obtain the shares, or else, sign a blank cheque and send it to us and then we will see to what extent we are going to make you liable by putting your name on the register of shareholders.
" The conclusion of the High Court on this point has been stated in these terms: "Sir Jamshedji relies on the attitude taken up by his client and has contended that he took up the right attitude by enquiring as to who the real beneficiary was and to be satisfied by the production of the relative transfer forms.
Now, if this had been the only attitude of Reddy much might have been said in his favour.
But unfortunately in this very letter Reddy clearly declined any liability or obliga tion upon him to apply for these shares on behalf of his beneficiary.
Whether he knew that his purchaser was Sir Padampat or not, as the learned Judge has held, or whether there is force in Sir Jamshedji 's contention that Messrs. Craigie, Blunt and Caroe referred to the purchasers as Sir Padampat and others, the fact remains that Reddy did not accept his liability as a trustee and then agreed to discharge that liability provided he was satisfied as to who his purchaser was.
He only wanted to be satisfied about his purchaser in order to send to him the letter of renunciation.
That was the only question on which he wanted to be satisfied. 'In view of the attitude taken up by Reddy the plaintiff had no other course open to him except to file the suit, and, therefore, in our opinion the learned judge was right when he came to the conclusion that the plaintiff was entitled to the relief he had claimed.
" We have not been able to appreciate this line of thought.
The attitude adopted by Reddy could not cure the defects in the requisition alleged to have been made on behalf of the plaintiff.
If the directions given to the trustee were of an inconclusive nature, and were in law ineffective, then the trustee could not be mulcted in damages for not obeying them, even if his attitude was not what it should have been.
The plaintiff is not entitled to damages unless and until lie 143 proves that he made a proper and effective demand on the trustee and this the trustee failed to carry out.
On this ground also, both the suits are bound to fail.
Mr. Pathak argued that the plaintiff was entitled to reliefs A and B, both in his suit as well as in the receiver 's suit and that the receiver 's suit was wrongly dismissed by the High Court.
We are unable to agree.
In our opinion, the High Court rightly held that the receiver appointed in the suit of Sir Padampat could not acquire the newly issued shares in his name.
That privilege was conferred by section 105 C only on a person whose name was on the register of members.
The receiver 's name admittedly was not in the register and the company was not bound to entertain that application.
Mr. Pathak argued that that may be so but the receiver was not making an application in his individual right but he had been armed by the court with power to apply in the right of the defendant Reddy.
The fact however is that the receiver made the application in his own name.
Even if Mr. Pathak 's contention is right the company was no party to the suit filed by Sir Padampat against Reddy and that being so, no order could be issued to the company in that suit to recognize the receiver as a shareholder in place of Reddy.
The matter might have been different if the company was a party to the suit and was ordered by the court to register the receiver 's name in place of Reddy for the 484 shares purchased by Sir Padampat and was also ordered to issue new shares in the name of the receiver.
It is not necessary for us to offer any final opinion on the question if the court would have been within its right to direct his name to be included in the register, even if the company was impleaded in the suit filed by Sir Padampat against Reddy.
We are however quite clear that the company not having been impleaded in that suit, it was not bound to issue the now shares in the name of a person whose name was not already in the register of members even if he represented a person whose name was already in the register.
The High Court was thus right in dismissing the receiver 's suit.
We are also of the opinion that the appellate bench of 144 the High Court was also right when it declined to grant reliefs A and B of the plaint to Sir Padampat.
The sanction given to the company to issue new capital had lapsed long before Bhagwati J. granted reliefs A and B to the plaintiff.
It was an extraordinary procedure in a civil suit to direct a company which was no party to the original suit to obtain fresh sanction for the issue of new shares and then allot them to the plaintiff It seems to have been overlooked that if sanction to issue new capital was somehow obtained, that capital would also have to be distributed as directed by section 105 C and could not be allotted by the directors in favour of any particular shareholder.
In the altered situation that arose after the institution of the suit, if the plaintiff succeeded, the only relief that could be granted to him was the relief of damages.
We are however unable to grant the relief to the plaintiff in view of our finding that Reddy could not be compelled as constructive trustee to buy new shares in his own name for the cestui que trust and further in view of our finding that even if he could be compelled to acquire those shares in his own name for the cestui que trust he could not be said to have defaulted in his duty in carrying out the directions of the cestui que trust as in this case no proper and valid requisition was made by the cestui que trust on the trustee for the acquisition of those shares.
The plaintiffs in the two suits are therefore not entitled to any relief For the reasons given above, we allow Reddy 's appeal No. 53 of 1950 and dismiss the cross appeal of Sir Padampat as well as the receiver 's appeal No. 52 of 1950 and dismiss both the suits, but in the circumstances of this case we will make no order as to costs in both the suits throughout.
Appeal No. 53 allowed.
Appeals Nos. 52 and 54 dismissed.
Agent for the appellants in Appeals Nos. 52 and 54 and the respondent in Appeal No. 53: section P. Varma.
Agent for the respondents in Appeals Nos. 52 and 54 and the appellant in Appeal No. 53: Rajinder Narain.
| A, who held a certain number of shares in a company, sold some of these shares to B on the 29th July, 1944, and executed blank transfer forms in respect of the shares.
B made an application to the company for registration of his name, only on the 11th April, 1945, and his application was rejected.
Meanwhile, in February, 1945, the company resolved to issue new shares and offered to A the number of shares to which he was entitled under the provisions of section 105 C of the Indian Companies Act in respect of the shares which stood in the register in his name.
A did not apply for the now shares pertaining to the shares sold to B. A firm of solicitors sent a requisition to A on behalf of B, C, D, E and others who claimed to be the purchasers of the shares sold by A, calling upon A to apply for the additional shares, and to hold them, when allotted, on behalf of B, C, D and E and others, and offering to indemnify A against all liabilities he may incur thereby.
A declined to apply but offered to sign the renunciation form in favour of the true purchasers.
As the time fixed for making an application for the new shares was about to expire, B filed a suit against A praying that A may be ordered to deliver to B the application form for the now shares, and to hand over the new share certificates when received, with transfer forms in blank duly signed by him, and for damages in the alternative.
A receiver 17 118 was appointed and he applied to the company in his own name for allotment of the new shares and for registering his name in respect thereof but the company declined to do so.
The receiver filed a suit against the company for allotment of the new shares to him.
The High Court of Bombay held that, as A was a trustee of B in respect of the new issue, and he had failed to apply for the new shares, he was liable in damages to B.
On appeal : Held, (i) that if A ",as not of his own volition, prepared to obtain the now shares in his name, there was no principle of law or equity by which he could be compelled to acquire those shares by spending his own money or by undertaking financial liabilities and pass them over to B on receiving the amount spent by him from the purchaser or being otherwise fully indemnified by him in respect of the liabilities incurred or to be incurred.
(ii)Assuming that A was under any such obligation, as the requisition made by the solicitors to A to purchase the shares was made on behalf of 4 disclosed and some undisclosed persons, it was ineffective and inadequate, and A was not guilty of any breach of duty as a trustee in not complying with the requisition.
(iii)As B had no right to call upon A to buy the new shares in his own name for his (B 's) benefit, a fortiori, the receiver had also no such right.
(iv) In any event, as the company was not a party to B 's suit, no order could be issued to the company in that suit to recognise the receiver as a shareholder in respect of shares sold to B and, as long as he was not on the register, the company was not bound to entertain an application from him for issue of the now share in his favour.
Hardoon vs Belilios ([1901] A. C. 118), E. D. Sassoon, & Co Ltd. vs Patch , Miles vs Safe Deposit Trust Co. (66 L.E. 903) referred to.
Biss vs Biss ([1903] 2 Ch. 40), Jones vs Evans ([1913] 1 Ch.
23) distinguished.
|
: Criminal Appeal No. 7 of 1951.
Appeal under article 134 (1)(c) of the Constitution of India from the Judgment and Order dated the 10th March, 1951, of the Court of the Judicial Commissioner, Vindhya Pradesh, Rewa, in Criminal Appeal No. 81 of 1950, arising out of the Judgment and Order dated the 26th July, 1950, of the Court of Special Judge, Rewa, in Criminal Case No, 1 of 1949.
1191 G. section Pathak (K. B. Asthana, with him), for the, appellant No. 1.
K. B. Asthana, for appellant No. 2.
M. C. Setalvad, Attorney General for India, (G. N., Joshi, with him), for the respondent.
May 22.
The Judgment of the Court was delivered by JAGANNADHA DASJ.
This is an appeal against the judgment of the Judicial Commissioner of Vindhya Pradesh dated 10th March, 1951, by leave granted under article 134(1) (c) of the Constitution.
The first and the second appellant,% were at the material period of time respectively the Minister for Industries and the Secretary to the Government, Commerce and Industries Department of the then United State of Vindhya Pradesh.
The case for the prosecution against them is as follows: In the State of Panna (one of the component units of the United State of Vindhya Pradesh) there are certain diamond mines.
By an agreement dated the lit of August, 1936, between the Panna Durbar on the one part and the Panna Diamond Mining Syndicate on the other part, the latter obtained a lease for carrying out diamond mining operations for a period of 15 years.
It appears that on or about the 31st October, 1947, the Panna Durbar directed the stoppage of the mining work on the ground that the Syndicate was not carrying on the operations properly.
Since then the Syndicate was making strenuous efforts to obtain cancellation of the said order.
It is alleged that the two appellants in the course of these attempts, with which, at the material time, they were concerned in their official capacity, entered into a conspiracy about the beginning of February 1949 at Rewa (within the United State of Vindhya Pradesh), to obtain illegal gratification for the purpose of revoking the previous order of stoppage of mining work In pursuance of the said conspiracy it is alleged that the second appellant demanded on 8th March, 1949, at Rewa illegal gratification from one Nagindas Mehta, a 1192 representative of the Panna Diamond Mining Syndicate, and that later on 11th April, 1949, the first appellant, in fact, received a sum of Rs. 25,000 towards it at the Constitution House in New Delhi and forged certain documents purporting to be orders passed in official capacity and intended to confer some advantages or benefits on the Panna Diamond Mining Syndicate.
On these allegations the two appellants were charged for criminal conspiracy and for the taking of illegal gratification by a public servant for doing an official act and for the commission of forgery in connection therewith.
The charges were under sections 120 B, 161, 465 and 466, Indian Penal Code, as adapted by the Vindhya Pradesh Ordinance No. XLVIII of 1949, and the trial was held by a Special Judge under the Vindhya Pradesh Criminal Law Amendment (Special Court) Ordinance No. V of 1949.
At the trial both the appellants were acquitted.
The State filed an appeal to the Judicial Commissioner against the same whereupon both were convicted under sections 120 B and 161, Indian Penal Code (as adapted).
In addition, the first appellant was convicted under sections 465 and 466, Indian Penal Code (as adapted).
He was sentenced to rigorous imprisonment for three years and to a fine of Rs. 2,000 under section 120 B and to rigorous imprisonment for three years under section 161, Indian Penal Code, the two sentences to run concurrently.
In respect of his conviction under sections 465 and 466 no separate sentence was awarded.
The second appellant was sentenced to one year 's rigorous imprisonment and a fine of Rs. 1,000 under section 120 B, but under section 161 no separate sentence was awarded.
The validity of the convictions and sentences has been challenged on the ground that there has been infringement of articles 14 and 20 of the Constitution.
In addition, a further point has been raised before us by leave that no appeal lay to the Judicial Commissioner from the acquittal by the special Judge.
It is convenient to deal with this point in the first 1193 instance.
The question raised depends oil a construction of the provisions of the Vindhya Pradesh Criminal Law Amendment (Special Court) Ordinance No. V of 1949 dated 2nd December, 1949.
By section 2 thereof the Vindhya Pradesh Government was given the power by notification to constitute Special Courts of criminal jurisdiction within the State and by section 3 to appoint a Special Judge to preside over the Special Court.
By section 4 the Government was authorised to issue notifications from time to time allotting cases for trial by the Special Judge in respect of charges for offences specified in the Schedule to the Ordinance.
Sections 5(1), 7 and 8 provide certain departures from the normal procedure or evidence, and section 9 provides for special punishment.
Section 5, sub section (2) provides as follows : "Save as provided in sub section (1) the provisions of the Code of Criminal Procedure, as adapted in Vindhya Pradesh, shall, so far as they are not inconsistent with this Ordinance, apply to the proceedings of a Special Court, and for the purposes of the said provisions, the Court of the Special Judge shall be deemed to be a Court of Session trying cases without a Jury or without the aid of Assessors, and a person conducting a prosecution before a Special Judge shall be deemed to be a Public Prosecutor.
" Section 6 provides as follows : "The High Court may, subject to the provisions of section 7 regarding transfer of cases, exercise, so far as they may be applicable, all the powers conferred by Chapters XXXI and XXXII of the Code of Criminal Procedure, as adapted in Vindhya Pradesh, on a High Court as if the Court of the Special Judge were a Court of Session trying cases without a Jury within the local limits of the High Court 's juris.
dictions.
" The argument of learned counsel for the appellants is that section 6 above quoted provides only for the powers of the High Court on appeal preferred to it, but that there is no provision at all confer.
ring on an aggrieved party a right of appeal from 1194 the judgment and order of the Special Judge to I the High Court.
It is contended that the absence of a right of appeal may be a lacuna, but that inasmuch as it has not been expressly provided, it cannot be implied from the fact that a provision has been made for the exercise of powers by the appellate court.
It is conceded that this line of argument, if accepted, would result in there being no appeal even as against a conviction.
But it is urged that it is the inevitable consequence of the lacuna.
It appears however on careful consideration that no such lacuna exists and that sub section (2) of section 5 of the Vindhya Pradesh Ordinance reasonably construed is an express provision conferring a right of appeal to the aggrieved party, whether an accused or the State, against the judgment of the Special Judge.
The section, in terms, says that the provisions of the Code of Criminal Procedure as adapted and in so far as they are not inconsistent with the Ordinance shall apply to the proceedings of a Special Court, and that for the purposes of the said provisions (that is, the adapted provisions which are not inconsistent and hence apply) the court of a Special Judge is to be deemed a Court of Session.
The provisions of the Criminal Procedure Code relating to the right of appeal are sections 410 and 417, and there is nothing in the Vindhya Pradesh Ordinance which is inconsistent with the application of these two sections to the proceedings of a Special Court treated as a Court of Session for the purpose.
It follows that the said proceedings are subject to appeal.
But it is urged that the provisions of the Criminal Procedure Code that are attracted by sub section (2) of section 5 of the Vindhya Pradesh Ordinance to the proceedings of a Special Court are only those provisions which relate to the procedure before the Special Court itself in respect of the proceedings before it and not all the provisions which are connected with or related to those proceedings.
There is, in our opinion, no warrant for putting such a limited construction on this sub section.
The only limitation on the application of the provisions of the Criminal Procedure Code to the 1195 proceedings of the Special Court is the one arising from the existence of any inconsistent provisions in the, Ordinance and not with reference to ' the conduct of the proceedings before that very court.
Once the Special Court is to be deemed a Court of Session the normal right of appeal provided by section 410 or section 417 as the case may be, must be taken to have been expressly provided by reference and not as arising by mere implication.
Learned counsel strongly relied on Attorney General vs Herman James Sillem(1) to show that a provision such as the above was meant only to regulate the proceedings in a case within the four walls or limits of the court.
The statutory provision which came up for construction in that case was however very differently worded, and was meant to regulate "the process, practice, and mode of pleadings," i.e., the procedure.
in the court and not "the proceeding" of the court.
While, no doubt, it is not permissible to supply a clear and obvious lacuna in a statute and imply a right of appeal, it is incumbent on the court to avoid a construction, if reasonably permissible on the language, which would render a part of the statute devoid of any meaning or application.
The construction urged for the appellant renders section 6 futile and leaves even a convicted person without appeal.
We have no hesitation in rejecting it.
Out of the constitutional points raised, that which relates to the alleged violation of article 14 has no substance.
In reliance on Lakshnwndas Ahuja 's case(2) it was sought to be argued that though the trial in this case under Ordinance No. V of 1949 related to offences committed prior to the commencement of the Constitution, the continuance thereof under the special procedure prescribed by the Ordinance was discriminatory and hence unconstitutional.
It is to be noticed that the trial commenced on 2nd December, 1949, the acquittal by the Sessions Judge was on 26th July, 1950, and the conviction by the Judicial Commissioner on appeal therefrom was on 10th March, 1951.
In the (1) ; ; xi E. R. 1200.
(2) ; 1196 light, however, of the later decision of the Supreme Court in Syed Qasim Razvi vs The State of Hyderabad(1), )it was recognised that this point was unsubstantial, unless some material prejudice in the matter of procedure was shown.
In this context the learned Attorney General brought to our notice that even before the Criminal Law Amendment(Special Court) Ordinance No. V of 1949, dated 2nd December, 1949, came into force there was in operation the Code of Criminal Procedure Adaptation (Amendment) Ordinance No. XXVIII of 1949 dated 3rd May, 1949, whereby section 268, Criminal Procedure Code, requiring all trials before a Court of Session to be either by jury or with the aid of assessors was deleted from the Vindhya Pradesh Criminal Procedure Code as adapted.
Therefore by the date when the trial in the present case commenced before the Special Court there was no substantial or material prejudice caused to an accused who was tried by the Special Court, and the continuance of such procedure after the Constitution came into force would make no serious difference.
What, however, was relied upon was a subsequent change in the situation as a result of section 3 of Central Act No. XXX of 1950 [Part C States (Laws) Act, 1950], whereby Acts and Ordinances specified in the Schedule to the (LIX of 1949) were extended to Vindhya Pradesh, and one of the Acts specified in that Schedule was the entire Code of Criminal Procedure.
This therefore had the effect of reviving section 268, Criminal Procedure Code, in its application to Vindhya Pradesh, repealing by section 4 of the Act the pre existing law in this behalf in the State.
It was accordingly argued that to the extent the trial continued under the old procedure subsequent to 16th April, 1950, there were inevitable discrimination and necessary prejudice.
This argument, however, overlooks the fact that the repealing section 4 of Act No. XXX of 1950 contained a saving clause providing that "the repeal shall not affect (a) the previous operation of any such law, or (b) any penalty, forfeiture or punishment incurred in respect (1) ; 1197 of any offence committed against any such law, or (c) any investigation, legal proceeding or remedy in respect of any such penalty, for feiture or punishment, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed.
" It is to be noticed that the saving provision applies equally to proceedings previously commenced and then pending, whether before the special court or the ordinary court, and that therefore in respect of two persons equally situated in this behalf, one under trial by the ordinary court and the other by the special court, the position continues what it was before, i.e., the continuance of trial does not involve any substantially discriminatory and pre judicial procedure.
Learned counsel however attempted to argue that the very saving clause was a discriminatory provision and hence unconstitutional and invalid.
But there is no reason, why pending proceedings cannot be treated by the legislature as a class by themselves having regard to the exigencies of the situation which such pendency itself calls for.
There can arise no question as to such a saving provision infringing article 14 so long as no scope is left for any further discrimination inter se as between persons affected by such pending matters.
The next and the only serious question that arises 'in this case is with reference to the objections raised in reliance on article 20 of the Constitution.
This question arises from the fact that the charges as against the two appellants, in terms, refer to the offences committed as having been under the various sections of the Indian Penal Code as adapted in the United States of Vindhya Pradesh by Ordinance No. XLVIII of 1949.
This Ordinance was passed on II th September, 1949, while the offences themselves are said to have been committed in the months of February, March and April, 1949, i.e., months prior to the Ordinance.
It is urged therefore that the convictions in this case which were after the Constitution came into force 155 1198 are in respect of an ex post facto law creating offences after the commission of the acts charged as such offences and hence unconstitutional.
This contention raises two important questions, viz., (1) the proper construction of article 20 of the Constitution, and (2) whether the various acts in respect of which the appellants were convicted constituted offences in this area only from the date when Ordinance No. XLVIII of 1949 was passed or were already so prior thereto.
Article 20(1) of the Constitution is as follows: "No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
" This article in its broad import has been enacted to prohibit convictions and sentences under expost facto laws.
The principle underlying such prohibition has been very elaborately discussed and pointed out in the very learned judgment of Justice Willes in the well known case of Phillips vs Eyre(1) and also by the Supreme Court of V. section A. in calder vs Bull (2).
In the English case it is explained that ex post facto laws are laws which voided and punished what had been lawful when done.
There can be no doubt as to the paramount importance of the principle that such ex Post facto laws, which retrospectively create offences and punish them are bad as being highly inequitable and unjust.
In the English system of jurisprudence repugnance of such laws to universal notions of fairness and justice is treated as a ground not for invalidating the law itself but as compelling a beneficent construction thereof where the language of the statute by any means permits it.
In the American system, however, such ex post facto laws are themselves rendered invalid by virtue of article 1, sections 9 and 10 of its Constitution.
It is contended by the learned Attoney General that article 20 of ' the Constitution (1) (1870) 6 Q.B.D. i, at 23,and 25.
(2) ; ; I Law.
Edition 648 at 649, 1199 was meant to bring about nothing more than the invalidity of such ex post facto laws in the post Constitution period but that the validity of the pre Constitution laws in this behalf was not intended to be affected in any way.
The case in Keshavan Madhavan Menon vs The State of Bombay(1) has been relied on to show that the fundamental rights guaranteed under the Constitution have no retrospective operation, and that the invalidity of laws brought about by article 13 (1) of the Constitution relates only to the future operation of the pre Constitution laws which are in violation of the fundamental rights.
On this footing it was argued that even on the assumption of the convictions in this case being in respect of new offences created by Ordinance No. XLVIII of 1949 after the commission of the offences charged, the fundamental right guaranteed under article 20 is not attracted thereto so as to invalidate such convictions.
This contention, however, cannot be upheld.
On a careful consideration of the respective articles, one is struck by the marked difference in language used in the Indian and American Constitutions.
Sections 9(3) and 10 of article I of the American Constitution merely say that "No ex post facto law shall be passed. " and " No State shall pass ex Post facto law.
But in article 20 of the Indian Constitution the language used is in much wider terms, and what is prohibited is the conviction of a person or his subjection to a penalty under ex post facto laws.
The prohibition under the article is not confined to the passing or the validity of the law, but extends to the conviction or the sentence and is based on its character as an ex post facto law.
The fullest effect must therefore be given to the actual words used in the article.
Nor does such a construction of article 20 result in giving retrospective operation to the fundamental right thereby recognised.
All that it amounts to is that the future operation of the fundamental right declared in article 20 may also in certain cases (1) ; 1200 result from acts and situations which had their commencement in the pre Constitution period.
In The Queen vs St. Mary Whitechapel (1) Lord, Denman C.J. pointed out that a statute which in its direct operation is prospective cannot properly be called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing.
The lgeneral principle therefore that the fundamental rights have no retrospective operation is not in any way affected by giving the fullest effect to the wording of article 20.
This article must accordingly be taken to prohibit all convictions or subjections to penalty after the Constitution in respect of ex post facto laws whether the same was a post Constitution law or apre Constitution law.
That such is the intended of the wording used in article 20(1) is confirmed by the similar wording used in articles 20 (2) and 20 (3).
Under article 20 (2) for instance, it cannot be reasonably urged that the prohibition of double jeopardy applies only when both the occasions there for arise after the Constitution.
Similarly.
under article 20 (3) it cannot be suggested that a person accused before the Constitution can be compelled to be a witness against himself, if after the Constitution the case is pending.
In this context it is necessary to notice that what is prohibited under article 20 is only conviction or sentence under an ex post facto law and not the trial thereof.
Such trial under a procedure different from what obtained at the time of the commission of the offence or by a court different from that which had competence at the time cannot ipso facto be held to be.
unconstitutional.
A person accused of the commission of an offence has no fundamental right to trial by a particular court or by a particular procedure, except in so far as any constitutional objection by way of discrimination or the violation of any other fundamental right may be involved.
In this connection our attention has been drawn to the fact that the Vindhya Pradesh Ordinance XLVIII of 1949, though enacted on 11th September, (1) ; at 814.
1201 1949, i.e., after the alleged offences were committed, was in terms made retrospective by section 2 of the said Ordinance which says that the Act " shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948" a date long prior to the date of the commission of the offences.
It was accordingly suggested that since such a law at the? time when it was passed was a valid law and since this law had the effect of bringing this Ordinance into force from 9th August, 1949, it cannot be said that the convictions are Dot in respect of "a law in force" at the time when the offences were committed.
This, however, would be to, import a somewhat technical meaning into the phrase "law in force" as used in article 20. " Law in force" referred to therein must be taken to relate not to a law "deemed" to be in force and thus brought into force, but the law factually in operation at the time or what may be called the then existing law.
Otherwise, it is clear that the whole purpose of article 20 would be completely defeated in its application even to ex post facto laws passed after the Constitution.
Every such ex post facto law can be made retrospective, as it must be, if it is to regulate acts committed before the actual passing of the Act, and it can well be urged that by such retrospective operation it becomes the law in force at.
the time of the commencement of the Act.
It is obvious that such a construction which nullifies article 20 cannot possibly be adopted.
It cannot therefore be doubted that the phrase "law in force" as used in article 20 must be understood in its natural sense as being the law in fact in existence and in operation at the time of the commission of the offence as distinct from the law "deemed" to have become operative by virtue of the power of legislature to pass retrospective laws.
It follows that if the appellants are able to substantiate their contention that the acts charged as offences in this case have become such only by virtue, of Ordinance No. XLVIII of 1949 which has admittedly been passed subsequent to the commission thereof, then they would be entitled to the benefit of article 20 of 12O2 the Constitution and to have their convictions set ,aside.
This leads to an examination of the relevant pre existing law.
But before taking up that examination, it is convenient to deal with a contention which has been repeatedly pressed on us, viz., that the validity of the convictions in this case cannot be upheld on a consideration of the pre existing state of law, because (1) the charges are specifically with reference to the offences under Ordinance No. XLVIII of 1949, and (2) the said Ordinance itself has repealed the preexisting law.
This contention is, however, without any substance.
An examination of the pre existing state of law in this behalf as on the date of the commission of the offence is not for the purpose of converting the convictions under Ordinance No. XLVIII of 1949 into those under the previous law.
The convictions in this case are clearly and legally referable only to Ordinance No. XLVIII of 1949, which was the law applicable to the offence at the time of the commission thereof on account of the retrospective operation validly given to that law by section 2 of the Ordinance.
It is only for the purpose of considering the constitutional validity of those convictions that the factual position as regards the previous law in this behalf becomes necessary to be examined.
This is a question which arises on the contention of the appellants themselves, and is not an objection to the frame of the charge or the legality of the conviction otherwise than on the footing of constitutional invalidity.
Nor is there any question of prejudice involved, since that question has been raised on behalf of the appellants in the trial court itself, and the burden of making out the facts requisite for the constitutional invalidity of the convictions is on them.
The argument that on the very terms of Ordinance No. XLVIII of 1949 there is no pre existing law with reference to which the constitutionality of the convictions under article 20 is to be judged is based on sections 2 and 3 (1) of the said Ordinance, which run as follows: 1203 Section 2: "The Indian Penal Code as in force generally in the Provinces of India immediately before the commencement of this Ordinance shall apply, and shall be in force in Vindhya Pradesh, subject to the adaptation and modifications set out in the Schedule, and the said Code as so applied shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948.
" Section 3 (1): " If immediately before the commencement of this Ordinance there is in force in Vindhya Pradesh or any part thereof any law corresponding to the Indian Penal Code, such law is hereby repealed.
" It is urged that as a result of these two provisions the pre existing law, if any, has been repealed as from 9th August, 1948, and that therefore the period bet.
ween 9th August, 1948, and 11th September, 1949, on which date Ordinance No. XLVIII of 1949 came into force must be taken to be a period of no penal law in this territory for judging the constitutionality of any conviction subsequent to 11th September, 1949, for an alleged offence committed during that period.
This argument is self contradictory, and proceeds on misconception.
What is relevant for the application of article 20 is not the result brought about by repeal and the retrospective operation thereof, but the factual state of law as it existed prior to the date when the repeal came into operation.
The repeal itself posits the pre existence of the law, and it is that law which is relevant for our present purpose.
It therefore becomes necessary to examine in some detail what was the criminal law factually in force during the months of February, March and April, 1949, when the acts charged as offences against the appellants were committed, and to see whether it wag anything different from what was enacted by Ordinance No. XLVIII of 1949.
Since the valid existence of such law has been, in the course of the arguments, contended as depending on the administrative set up at the relevant period and the legislative authority functioning 1204 in that set up, it becomes necessary to have a ,correct appreciation of the events which resulted in bringing about a United State of Vindhya Pradesh.
The State of Vindhya Pradesh consists of as many 5 pre existing native States known as Bundelkhand Baghlielkand States of which the State of Rewa apparently the largest unit.
Immediately after the passing of the Indian Independence Act of 1947 which by virtue of section 7 thereof resulted in the lapse of the suzerainty of the British Government in India, these various States executed in favour of the Government of India Instruments of Accession under section 6 of the Government of India Act in accordance with the form which is found at pages 165 and 169 of the White Paper on Indian States issued by the Government of India in March 1951.
At about the same time they executed also standstill agreements as per form given at page 173 of the White Paper.
Shortly thereafter and in pursuance of the policy of the Government of India all these 35 States executed, with the concurrence of the Government of India, an inter se Covenant dated 18th March, 1948, for the establishment of a UnitedState of VindhyaPradesh com prising the territories of these 35 States with a common executive, legislature and judiciary.
That Covenant provided for common administrative arrangements and for the election of a Rajpramukh.
Article 9 of the Covenant vested in the Rajpramukh the entire legislative authority of the United State of Vindhya Pradesh until a Constitution to be framed by the appropriate body for the said United State of Vindhya Pradesh provided otherwise.
The Maharajah of Rewa became the first Rajpramukh of the United State of Vindhya Pradesh, and we are informed that.though the Covenant provided the 1st day of May, 1948, as the date within which the administration is to be made over to the Rajpramukh by each of the States, some did not, and that, as a fact, the integrated administration by the Rajpramukh in respect of all States came into operation only from the 9th of August, 1948, Meanwhile, however, it appears to have 1205 been thought expedient that a fresh Instrument of Accession should be executed by the Rajpramukh on behalf of the United State of Vindhya Pradesh replacing the individual Instruments of Accession which were executed in the months of August, September, October and November, 1947.
Consequently a fresh, Instrument of Accession was executed by the Rajpramukh on behalf of the United State of Vindhya Pradesh on the 20th of July, 1948, and was accepted by the Governor General of India on the 13th of September, 1949.
It may be incidentally mentioned that one of the important differences between the previous individual Instruments of Accession executed by the various rulers and the later Instrument of Accession executed by the Rajpramukh is that while under the former, accession was only in respect of three matters, viz., Defence, External Affairs and Communications, under the later Instrument dated the 20th of July, 1948, all matters enumerated in Lists Nos.
I and III of the Seventh Schedule of the Government of India Act, 1935, were accepted as the matters in respect of which the legislature of India, then called the Dominion Legislature, might make laws for the United State of Vindhya Pradesh.
It may also be mentioned that on the 25th November, 1949, the Rajpramukh of the United State of Vindhya Pradesh issued a proclamation whereby he declared that the Constitution of India which was then shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the Vindhya Pradesh as for the other parts of India and specifically superseded and abrogated all other constitutional provisions inconsistent therewith which were then in force in this State.
These arrangements brought about an integrated United State of Vindhya Pradesh within the framework of the Dominion of India but only by way of accession.
Further steps, however, had the effect of merging these United States as part of the territory of India.
It is unnecessary to notice those steps in detail, as they fall beyond the period with which we are concerned for the present purpose, 156 1206 It is against this background of events constituting the integration of these various ruler States into the United State of Vindhya Pradesh within the Union of India by accession thereto that the question as to what was the criminal law in force by February, March and April, 1949, has got to be judged.
From the above ,narration it will be noticed that at the relevant period it was the Government of the United State of Vindhya Pradesh constituted by the inter se integration Covenant dated the 18th March, 1948, that was functioning under the authority of the Rajpramukh of Vindhya Pradesh and subject to the Instrument of Accession with the Dominion of India executed by him on the 20th July, 1948.
As already stated, the actual integrated administration under these arrangements came into operation for the entire United State only on the 9th of August, 1948.
We may now start with the fact above noticed that the various component States became the United State of Vindhya Pradesh on the 18th March, 1948.
In the normal course and in the absence of any attempts to introduce uniform legislation throughout the State the pre existing laws of the various component States would continue to be in force on the well accepted principle laid down by the Privy Council in Mayor of Lyons vs East India Company(1).
The first step towards the introduction of some uniformity in the laws for the entire State was taken by the Rajpramukh by issuing on the 31st July, 1948, an Ordinance styled the Vindhya Pradesh Application of Laws Ordinance No. IV of 1948.
Section 2 of that Ordinance provided as follows: "All Acts, Codes, Ordinances and other laws, and rules and regulations made thereunder, which have, by publication in the Rewa Raj Gazette, been enforced in the Rewa State, and continue to be in force, are extended so as to be applicable to the whole of Vindhya Pradesh, Provided that nothing in this clause shall apply to any local law, rules, regulation or custom having the force of law, which relates to matters connected with land revenue or tenancy.
" (1) 1 M.I.A. 175, at 270,,271.
1207 This Ordinance extended to the whole of Vindhya, Pradesh, and was to come into force with effect from the 9th of August, 1948, by virtue of section I thereof.
The Ordinance was amended later by another Ordinance No. XX of 1949 which deleted from section 2 of the previous Ordinance the words "by publication in the Rewa Raj Gazette".
The effect of these two Ordinances, so far as we are concerned, was to extend ' to the entire State of Vindhya Pradesh the criminal law which was in force previously in the Rewa State.
That law is to be found by reference to Orders Nos.
IV of 1921 and VI of 1922 issued by the then Regent of Rewa acting for the Maharajah on the 18th February, 1921, and 9th March, 1922, respectively.
A perusal of these two Orders and in particular of paragraph 10 of the 1921 Order as interpreted by the 1922 Order makes it perfectly clear "that the Indian Penal Code and the Code of Criminal Procedure were introduced in the Rewa State, in the letter and in the spirit with due adaptation to local conditions.
" It is not disputed that this continued to be the position so far as Rewa State was concerned until the United State of Vindhya Pradesh was formed.
It follows that the Indian Penal Code and the Code of Criminal Procedure with necessary adaptations were brought into operation in the entire United State of Vindhya Pradesh shortly after the introduction of the integrated administration under the Rajpramukh.
It has been urged, however, that though this may have been the intention, the intention did not become operative for reasons to be presently stated.
Section 2 of Ordinance No. IV of 1948 while extending the laws of Rewa State to the rest of Vindhya Pradesh refers to the publication of such laws in the Rewa Gazette as a requisite therefor, and it is pointed out that the Rewa Gazette itself came into existence only in October 1930 (vide page 386 of the printed paper book), whereas the Penal Code and the Criminal Procedure Code were brought into operation in the Rewa State in 1921 and 1922.
It is also pointed out that the deletion of the 1208 ,requirement of previous publication in the Rewa by Ordinance No. XX of 1949 came into operition only when that Ordinance was published in the Vindhya Pradesh Gazette, i.e., on the 15th May, 1949, sometime after the commission of the offence in this ,case.
To substantiate the view that only such of the Rewa laws which were previously published in the Rewa Gazette were understood as having been origi nally extended to Vindhya Pradesh by Ordinance No. IV of 1948, a decision of the Vindhya Pradesh High Court dated the 29th October, 1949, in Criminal Appeal No. 27 has been brought to our notice which assumes that the Prisoners ' Act in force in India was not in force in Vindhya Pradesh as there was no previous publication of it in the Rewa Gazette.
On the other side a notification of Vindhya Pradesh Government dated the 19th March, 1949, and published in the Vindhya Pradesh Gazette dated the 30th March, 1949, has been brought to our notice which specifically mentions all the laws by then in force in Vindhya Pradesh and shows "Indian Penal Code mutatis mutandis with necessary adaptations" as item 86 thereof This is relied on to show that there must have been a previous publication thereof in the Rewa Gazette before integration.
There seems to be considerable force in this argument that in respect of the various Rewa State laws which have been enumerated in the above mentioned Gazette as having been brought into force in Vindhya Pradesh (some of these are Acts prior to 1930) there must have been previous publication in the Rewa Gazette sometime after 1930, and that neither Ordinance No. XX of 1949 nor the decision of Vindhya Pradesh High Court relating to Prisoners ' Act (which is not one enumerated in the above Gazette) can be taken to negative it.
We are prima facie inclined to accept this view and to think that the Indian Penal Code as in force in Rewa became extended to Vindhya Pradesh by Ordinance No. IV of 1948.
But even assuming that section 2 of the Ordinance failed to achieve its purpose on account of misconception as to the previous publication of any particular Rewa law in the Rewa Gazette, 1209 it is clear that that Rewa law would continue to be in force in the Rewa portion of the United State of Vindhya Pradesh, as the Vindhya Pradesh law therefor, on the principle recognised in Mayor of Lyons vs East India Company (1), that on change of sovereignty over an inhabited territory the pre existing laws continue to be in force until duly altered.
Since in the present case we are concerned with offences committed in relation to the Rewa State portion of Vindhya Pradesh, there can be no reasonable difficulty in holding that the criminal law of Rewa State, i.e., the Indian Penal Code and the Criminal Procedure Code with adaptations mutatis mutandis, was the relevant law for our present purpose by the date of integrated administration, viz., the 9th August, 1948.
Now the subsequent alterations therein by Ordinances of the Rajpramukh may be shortly noticed.
So far as the substantive penal law is concerned, there was the Anti corruption Ordinance No. XII of 1948 dated the 16th December, 1948, and the Indian Penal Code (Application to Vindhya Pradesh) Ordinance No. XLVIII of 1949 dated the 11th September, 1949.
The former being prior to the dates of commission of the offences in the present case does not require any further notice.
So far as the Criminal Procedure Code is concerned, there were two Ordinances: (1) the Criminal Procedure Code Adaptation Ordinance No. XV of 1948 dated the 31st December, 1948, and (2) the Criminal Procedure Code Adaptation (Amendment) Ordinance No. XXVII of 1949 dated the 3rd May, 1949.
In view of what has been found above, viz., that by virtue of the Orders of the Regent of Rewa dated 1921 and 1922 the Indian Penal Code and Criminal Procedure Code with the necessary adaptations mutatis mutandis were in force in Rewa State and either became extended to the entire Vindhya Pradesh State from the 9th August, 1948, by Ordinance No. IV of 1948 or continued to be in force in the Rewa portion of Vindhya Pradesh State by virtue of the principle in Mayor of Lyons ' case (1) it is prima facie correct to say that the penal law in force (1) I M. I. A. 175 1210 in the relevant area was substantially the same both before and after the above mentioned amendments made by the Rajpramukh.
It is urged however that in two important respects relevant for our present purpose there is a difference.
It is pointed out that there is anamendment as regards the definition of "Public servant" by Ordinance No. XLVIII of 1949.
It is also urged that sections 3 and 4 of the Indian Penal Code and section 188 of the Criminal Procedure Code, which are extra territorial in operation could not have been brought into force into Rewa or Vindhya Pradesh by adaptation or legislation for lack of legislative competence in this behalf at the relevant times.
The points thus raised assume importance since the charges against the first appellant, who is a Minister, is in his capacity as a public servant and since also one of the charges against him is in respect of acts done in New Delhi completely outside Vindhya Pradesh.
It is true that Ordinance No. XLVIII of 1949 amended the Indian Penal Code by substituting for the previous first clause of section 21 thereof relating to the definition of a "public servant" the phrase "Every Minister of State".
But it does not follow that " a Minister of State" was not a public servant as defined in section 21 of the Indian Penal Code even before this amendment.
Clause 9 of section 21, Indian Penal Code, shows that every officer in the service or pay of the Crown for the performance of any public duty is a "public servant".
The decision of the Privy Council in King Emperor vs Sibnath Banerji(1) is decisive to show that a Minister under the Government of India Act is "an officer" subordinate to the Governor.
On the same reasoning there can be no doubt that the Minister of Vindhya Pradesh would be an "officer" of the State of Vindhya Pradesh.
Therefore, prior to the passing of Ordinance No. XLVIII of 1949 and on the view that the Indian Penal Code with necessary adaptations mutatis mutandis was in force at least in the Rewa portion of Vindhya Pradesh (if not in the entirety of Vindhya Pradesh) the first appellant was a public servant (1) at 222.
1211 as defined in section 21, Indian Penal Code, as adapted.
The amendment of the said section brought about therefore no substantial change in the position of the first appellant.
It has been faintly suggested that, even so, under the pre existing law the definition of public servant could have reference only to an officer of the Rewa State, and that the change brought about by Ordinance No. XLVIII of 1949 made only the Minister of Vindhya Pradesh State a public servant.
This argument is fallacious.
It is implicit in the continuance of Rewa law after integration that from the moment of such continuance it became the Vindhya Pradesh law for the Rewa portion of Vindhya Pradesh territory with the requisite implied adaptation consonant to the new set up.
There is therefore no substance in the argument that the amendment of section 21, Indian Penal Code, by Ordinance No. XLVIII of 1949 brought about any change in the situation of the first appellant as a public servant.
The further question that remains to be considered is whether under the Vindbya Pradesh law, acts committed outside the State are offences and are triable by Vindhya Pradesh courts, and whether in any case there was any such law in factual operation at the date when the acts charged as offences in this case were committed at New Delhi in April, 1949.
Under the normal Indian law the relevant legislative provisions are sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, and the question is whether by express or implied ' adaptation mutatis mutandis these sections can be held to have been validly in force in Vindhya Pradesh at the relevant period.
It is contended that the rulers of native States had no authority for extra territorial legislation, and that consequently any adaptation in this behalf cannot be implied and if expressly purporting to be made, cannot be valid.
There can be no doubt that the provisions of the Penal Code and the Criminal Procedure Code are in the nature of extra territorial legislation, and that every sovereign legislative authority has the power to pass such laws also.
[See Macleod 1212 vs Attorney General for New South Wales (1)].
In the, present case we are concerned only with that portion of the relevant extra territorial law which renders an act committed by a subject of the State outside the limits of the State an offence triable by the courts of state.
In the course of the arguments it has suggested that to that limited extent no question territoriality of the relevant legislation arises.
concept of extra territorial legislation appears to comprehend such cases also, if the passages relied on before us from Pitt Cobbet 's International Law, 5th Edition, at page 216 as also at pages 225 and 226 paragraphs 101 and 102, are to be accepted as correct.
Assuming without deciding that this is so, the argument has been advanced that no ruler of the Indian States, before the 15th August, 1947, and much less the Rajpramukh of Vindhya Pradesh, had any such full sovereign status as to entitle them to pass extraterritorial laws.
It is well known that these rulers had no external sovereignty, as it was taken out of them and exercised by the suzerain British power.
But for internal purposes or municipal purposes the rulers were generally considered as having full sovereign status except to the extent that the suzerain power assumed to itself any function of such internal sovereignty either on specific occasions, or generally but for specified and limited purposes.
In their relation with the rulers of the native States, the suzerain British power acted on the juristic theory propounded by Sir Henry Maine that "sovereignty is divisible, though independence is not"See Ilbert 's Government of India, page 425 a theory accepted in the Butler Committee Report on Indian States (1928 29) at page 25, paragraph 44.
The passages at pages 398, 399 and 426 of Ilbert 's Government of India would show that what may have been left of internal sovereignty to a particular ruler may in exceptional cases be nothing more than titular.
The general position of these Native States in India prior to 15th August, 1947, appears fairly clearly from certain instructive passages at pages 422 and 423 of Ilbert and is correlative (1) 1213 to the actual exercise of British jurisdiction within those States as appears from the following passages: "In point of fact the jurisdiction of the GovernorGeneral in Council within the territories of Native States is exercised (a) over European British subjects in all cases; (b) over native Indian subjects in certain cases; (c) over all classes of persons, British or foreign, within certain areas.
It is the policy of the Government of India not to allow native courts to exercise jurisdiction in the case of European British subjects but to require them either to be tried by the British courts established in the Native State, or to be sent for trial before a court in British India.
The Government of India does not claim similar exclusive jurisdiction over native Indian subjects of His Majesty when within Native States, but doubtless would assert jurisdiction over such persons in cases where it thought the assertion necessary. . " "The Government of India does not, except within specified areas, or under special circumstances, such as during the minority of a native prince, take over or interfere with the Jurisdiction of the courts of a Native State in cases affecting only the subjects of that State, but leaves such cases to be dealt with by the native courts in accordance with native laws.
" Lee Warner in his book on "Protected Princes of India" states the position at pages 351 and 352.
The following extract from paragraph 143 at page 351 is instructive : "But where, as in the case of European British subjects, material distinctions in religion, education, and social habits separate them from the native community, and justify the extension to them of those rights of ex territoriality, which are still obtained for them by Capitulations and agreements with foreign 157 1214 non Christian nations, these distinctions are absent in the case of native Indian subjects of Her Majesty.
The systems of native justice, if not similar to those in British territory, are more or less assimilated, and provided that the trial of native Indian subjects by the ordinary tribunals of the States, whose laws they have offended, is supervised by the British agent, the general rule is to leave to the Native States jurisdiction over such British subjects who break their laws, even where the offence committed is also cognisable under the law of India.
The British Government goes still farther, since it extradites to the Native State a native Indian subject, who, after the commission of an extraditable offence in the Native principality, seeks shelter in British territory, provided that the political agent is satisfied that the crime can be properly tried in the courts of the Native State.
The powers of the sovereigns of the States, in respect of the trial of native Indian subjects, have been generally classified.
Some chiefs can try any person, whether their own or a native Indian subject, for a capital offence without express permission; others can only try a native Indian subject for such an offence with permission; and others, again, cannot pass a final sentence of death without the confirmation of Government to it." These passages, while showing that the extent of the exercise of internal sovereignty by each of these rulers in actual practice, is a matter for evidence, when called in question, indicate that full jurisdiction over the rulers ' own subjects was never denied but generally conceded, except where a sentence of death was involved.
There is therefore no reason at all to think that the rulers had no authority to pass laws binding their own subjects and regulating their own courts in respect of acts committed outside their State assuming such laws to be extra territorial.
In this context an old treaty of 1813 between Rewa State and the British Government and a fairly recent judoment of the Rewa High Court in 1945 have been brought to our notice to show the contrary at least so far as Rewa State is concerned.
The treaty is to be found at page 255 of 1215 Volume V of Aitchison 's Treaties, Engagements and ' Sanads.
Article 6 thereof which is relied on only provides facilities for the suzerain Government to follow and pursue into Rewa State, offenders who having committed offences in British India escape away into the State.
This does not negative the authority of the Rewa State to enact legislation concerning its own subjects when they commit such offences outside the State.
1945 Rewa Law Reports 84 is no doubt a case in which the High Court assumed that the court had no jurisdiction to try an offence committed outside the State by a subject of the State.
There is no discussion in the judgment of the question involved, and this single instance is not enough to make out either the absence of the State 's legislative authority in this behalf or the factual non existence of the relevant law.
It must therefore be held that the rulers of the native States had prior to 1947, the authority to pass extra territorial laws relating to offences committed by their own subjects and vesting in their own courts the power to try them, except where the contrary is made out by evidence in the case of any individual State, and that so far at least as Rewa State is concerned, the contrary cannot be held to have been proved.
The further point that has been raised is that whatever may be the position of the Rewa State before 1947 the attempt of the Rajpramukh of the State of Vindhya Pradesh in so far as he purported to extend the extra territorial portion of any of the Rewa laws to Vindhya Pradesh by Ordinances Nos.
IV of 1948 and XX of 1949 and his attempt to introduce into Vindhya Pradesh the extra territorial portion of the Indian Penal Code and the Criminal Procedure Code by Ordinances Nos. XLVIIII of 1949 and XXVIII of 1949 respectively, must fail as he had no such authority for extra territorial legislation with reference to the basic covenants from which his authority was derived.
These basic covenants are as already above shown the inter se integration agreement 1216 dated 18th March, 1948, executed by all the rulers of the component States of Vindhya Pradesh and the Instrument of Accession dated 20th July, 1948, executed by the Rajpramukh in favour of the Dominion of India.
Under the inter se integration agreement and by article IX, clause (3) thereof, the Rajpramukh was vested with the power to make and promulgate Ordinances for the peace and good government of the United State of Vindhya Pradesh or of any part thereof.
Under the Instrument of Accession and by clause (3) thereof the Rajpramukh accepted all matters enumerated in Lists I and III of the Seventh Schedule to the Government of India Act, 1935, as matters in respect of which the Dominion Legislature may make laws for the United State.
It has been strenuously argued before us that in view of these provisions the authority of the Rajpramukh for legislation was in substance reduced to the powers of the Provincial Legislature within the framework of the Constitution of India as it then was.
Section 6, subsection (1), of the Indian Independence Act and section 99(2) as amended are relied on to show that the Provincial Legislature has no power to make extra territorial laws.
It is accordingly argued that the Rajpramukh had no power at least after the execution of the Instrument of Accession to amend or adapt the Indian Penal Code or the Criminal Procedure Code so as to bring into operation sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, with the necessary modifications in the State of Vindhya Pradesh.
Though this argument appears plausible, a careful scrutiny of the scheme of the integration and accession covenants as also of the relevant provisions of the Government of India Act and the Indian Independence Act shows clearly that such an argument is not tenable.
The provisions under the Government of India Act under which the Instrument of Accession has been executed keep the position of the Provinces distinct from the position of the acceding States.
Section 5(1) of the Government of India Act while making the provinces as well as the acceding States, 1217 part of the Dominion of India enumerates the two under separate categories by clauses (a) and (b).
Subsection (2) of section 6 specifically provided that, "An Instrument of Accession shall specify the matters which the Ruler accepts as matters with respect to which the Federal Legislature may make laws for his State, and the limitations, if any, to which the I power of the Federal Legislature to make laws for his State, and the exercise of the executive authority of the Federation in his State, are respectively to be subject.
" Section 101 of the Government of India Act in terms says that, "Nothing in the Act shall be construed as empowering the Federal Legislature to make laws for a Federated State otherwise than in accordance with the Instrument of Accession of that State and any limitation contained therein.
" If the argument put forward by the appellants ' counsel is correct, viz., that the mere reference to the legislative items in respect of which the Dominion Legislature could make laws applicable to the State of Vindhya Pradesh as Lists I and III carried with it the necessary implication that the Dominion Legislature alone had the power to make laws for the State with extra territorial operation, and to that extent therefore curtailed the legislative authority of the Rajpramukh, it would be tantamount to the importation of all the limitations under sections 99 to 104 into the Instrument of Accession.
This would be contrary to section 101 of the Government of India Act.
There is no justification for such a view merely because of the reference to the enumerated items as Lists I and III which may have been a matter of convenience for reference.
On the other hand, the Instrument of Accession in terms states by clause 9 as follows: "Save as provided by or under this Instrument nothing contained in this Instrument shall affect the exercise of any power, authority and rights enjoyed by the Rajpramukh or the validity of any law for the 1218 time being in force in the United State or any part thereof.
" The authority of the Rajpramukh which is referred to in this clause is not only the unfettered legislative authority "to make and promulgate Ordinances for the peace and good government of the United States or any part thereof" Vested in him by Article IX of the integration Covenant dated 18th March, 1948, but also that which is vested in him under article VI of the said agreement.
This article vests in him "all rights, authority, and jurisdiction belonging to the ruler of each Covenanting State and incidental to the government thereof," There can be no doubt therefore that if, as has been pointed out above, the various Covenanting States and in particular the State of Rewa, had the power to pass extra territorial laws at least to the extent of making certain acts committed outside the State by its subjects as offences and to vest in the State courts authority to deal with such offences, that power has not in any way been curtailed either by the integration Covenant or the Instrument of Accession.
It follows therefore that sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, at least in so far as it affected the subjects and courts of the State, were entirely within the legislative competence of the States concerned for all purposes of adaptation or amendments.
Now, so far as sections 3 and 4 of the Indian Penal Code are concerned, the amendment brought about by Ordinance No. XLVIII of 1949 is nothing more and nothing less than a mere adaptation of these sections for the new set up and this, as shown above, was exactly the law already in force without formal amendment.
Hence it would follow that the conviction of the appellants in respect of all the offences of which they are charged including the extra territorial offence said to have been committed by the first appellant at New Delhi is not open to the objection under article 20 on the ground that it is a conviction under an ex post facto law.
1219 As regards the amendments in the Criminal Procedure Code brought about by Ordinances Nos.
XV of 1948 dated the 31st December, 1948, and XXVII of 1949 dated the 3rd May, 1949, no detailed consideration is necessary in view of what has been held at the outset that the constitutional objection under article 20 does not apply to a change in procedure or change of court.
Items 62 and 63 of section 2 of Ordinance No ' XV of 1948 would seem to indicate that the jurisdiction which the criminal courts of Vindhya Pradesh previously had to try extra territorial offences was probably lost thereby.
If so, that jurisdiction,"as restored under Ordinance XXVII of 1949 by the amendment thereby of the said items 62 and 63 thus bringing it into line with section 188, Criminal Procedure Code, with the requisite adaptations.
Hence the power of the Vindhya Pradesh courts to hold trials for extra territorial offences which was probably interrupted from 31st December, 1948, was restored on 3rd May, 1949, before the trial in this case commenced with retrospective operation, i.e., as from the date of the prior Ordinance, i.e., 31st December, 1948.
In the result, we hold that (1) The appeal to the Judicial Commissioner from the acquittal by the Special Judge was competent; (2) The trial of the appellants under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance No. V of 1949 is not open to objection under article 14 of the Constitution; (3) The criminal law relating to the offences charged against the appellants at the time of their commission was substantially the same as that which obtained at the time of the convictions and sentences by the appellate court.
This was so both in respect of offences committed within the limits of the State of Vindhya Pradesh and those committed outside it ; (4) The law relating to the offence committed by the first appellant outside the State of Vindhya Pradesh (at New Delhi) was perfectly within the competence of the appropriate legislative authority at the relevant 1220 time; and (5) Consequent on 3 and 4 above, the objection to the convictions and sentences of the appellants ,under article 20 is not sustainable.
The appeal is accordingly directed to be posted for consideration whether it is to be heard on the merits.
Order accordingly.
| The appellants, who were during the relevant period, the Minister for Industries and Secretary to the Government respectively of the State of Vindhya Pradesh, were tried by a Special Judge under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance (No. V of 1949) for charges under sections 120 B, 161, 465 and 466 of the Indian Penal Code as adapted by the Vindhya Pradesh Ordinance No. XLVIII of 1949, the facts alleged against them being that they entered into a conspiracy in February, 1949, at Rewa to obtain illegal gratification for revoking a previous Government Order and in pursuance of that conspiracy the second appellant demanded such gratification on 8th March, 1949, at Rewa and the first appellant received Rs. 25,000 towards it on the 11th April, 1949, at New Delhi and forged certain documents purporting to be official orders.
They were acquitted by the Special Judge but on appeal the first appellant was convicted by the Judicial Commissioner on all the charges and the second as under sections 120 B and 161 of the Indian 1189 Penal Code.
The validity of the trial and convictions was challenged on appeal to the Supreme Court inter alia on the ground that they contravened articles 14 and 20 of the Constitution and on the ground that no appeal lay to the Judicial Commissioner from the order of the Special Judge.
Held (i) that, as section 5 (2) of the Vindhya Pradesh Ordinance, 1949, provided that the provisions of the Criminal Procedure Code shall apply to the proceedings of a Special Court and that the Special Judge shall be deemed to be a court of session, the normal right of appeal provided by section 410 or section 417, as the case may be, of the Criminal Procedure Code must betaken to have been expressly provided by reference, and the order of the Special Judge was appealable to the Judicial Commissioner.
Attorney General vs Herman James Sillem (11 H. L. C. 704) distinguished.
(ii) That the trial of the appellants did not contravene article 14 of the Constitution inasmuch as in the Vindbya Pradesh Criminal Procedure Code (as amended) which was in force at the commencement of the trial (namely 2nd December, 1949) there was no provision requiring all trials before Courts of Sessions to be either by jury or with the aid of assessors, and the fact that the entire Criminal Procedure Code including section 268 thereof was extended to Vindhya Pradesh on the 16th April, 1950, by the Part C States (Laws) Act, 1950, could not affect the validity of the trial after that date as section 4 of the said Act provides that the repeal of the earlier law by that Act shall not affect pending proceedings, and pending proceedings being a class in themselves, a provision saving such proceedings could not contravene article 14.
Syed Qasim Razvi vs State of Hyderabad ([1952] S.C.R. 710) referred to.
(iii) The prohibition contained in article 20 of the Constitution against convictions and subjections to penalty under ex post facto laws is not confined in its operation to post Constitution laws but applies also to ex post facto laws passed before the Constitution in their application to pending proceedings.
[The difference between Indian and American law in this respect pointed out.] (iv) Article 20, however, prohibits only conviction or sentence under an ex post facto law, and not the trial thereof.
Such trial under a procedure different from what obtained at the time of the offence or by a court different from that which had competence at that time cannot ipso facto be held to be unconstitutional.
(V) The expression " law in force " in article 20 means a law which was in fact in existence and in operation at the time of the commission of the offence (or, in other words, the then existing 154 1190 law) and does not include a law which by subsequent legislation has to be deemed to have been in force at that time.
(vi) Though the charges against the appellants were specifically framed with reference to the offence under Ordinance No. XLVIII of 1949, as the acts charged as offences did not become such only by virtue of the said Ordinance and as they were offences even under the law which prevailed at the time when the acts were committed, they could not be regarded as convictions for violation of a law which was not in force at the time of the commission of the acts charged.
(vii) By virtue of the Orders of the Regent of Row& of 1921 and 1922, the Indian Penal Code and the Criminal Procedure Code with the necessary adaptations were in force in the Rewa State and either became extended to the entire Vindhya Pradesh State from the 9th August, 1948, by Ordinance No. IV of 1948, or continued to be in force in the Rewa portion of that State by virtue of the principle laid down in Mayor of Lyons vs Bast India Co. (1 M.I. A. 175), and were the penal law in force in the relevant area when the acts were committed.
(viii) The amendment of the definition of "public servant" in S.21 of the Penal Code, made by Ordinance No. XLVIII of 1949 brought about no substantial change in the position of the first appellant as a public servant.
(ix) The Ruler of the Rewa State had prior to 1947 the authority to pass extra territorial laws relating to offences committed by his own subjects and vesting in his own courts the power to try them, that power was not in any way curtailed either by the integration covenant or the Instrument of Accession, and sections 3 and 4 of the Indian Penal Code and section 188 of the Criminal Procedure Code, at least in so far as they affected the subjects and courts of the State, were within the legislative competence of the State.
(x) The conviction of the appellants in respect of all the offences with which they were charged including the extra territorial offence said to have been committed by the first appellant at New Delhi was not illegal under article 220 on the ground that the conviction was under an ex post facto law.
|
Appeal No. 77 of 1952.
Appeal from the Judgment and Order dated the 9th January, 1951, of the High Court of Judicature at Calcutta (Harries C. J. and Banerjee J.) in its Special Jurisdiction (Income tax) in Income tax Reference No. 70 of 1950.
C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for the appellant.
N. C. Chatterjee (B. Sen, with him) for the respondents.
September 24.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal from a judgment of the High Court of Judicature at Calcutta delivered in a reference under section 66(1) of the Indian Incometax Act, whereby the High Court answered the question referred in the affirmative.
The assessee is a partnership concern.
When income tax was paid under the Act of 1918, the partnership concern consisted of three partners, Mathews, Figgies and Notley.
The name of the firm was A. W. Figgies & Co., and its ' business was that of tea brokers.
There were several changes in the constitution of the firm resulting in a change in the shares of 173 the partners.
In 1924, Mathews went out and his share was taken over by Figgies and Notley.
In 1926 another partner Squire was introduced.
In 1932 Figgies went out, and from 1932 to 1939 the partnership consisted only of Notley and Squire.
In 1939 Hillman was brought in and the partnership consisted of these three partners.
In 1943 Notley went out and the partnership business was carried on by the two partners, Squire and Hillman.
In 1945 Gilbert was brought in.
This arrangement continued up to 31st May, 1947, when the partnership was converted into a limited company.
For the assessment year 1947 48 the assessee claimed that it was entitled to relief under section 25(4) of the Act as the partnership firm had been succeeded by a private limited company.
There was a provision in the partnership deed of 1939 that on the retirement of any partner the partnership would not be determined but would be carried on by the remaining partners.
It appears that a fresh partnership deed was drawn up in the year 1945 when Gilbert was brought in.
The partnership constituted by these three partners continued to carry on the same business that had been started when the tax was paid under the Act of 1918.
From the statement of the case it does not appear that apart from the mere change in the personnel of the partners and in their respective shares there was any actual dissolution of the firm, and any division of its assets and liabilities or a succession to its business by any outside person.
The Income tax Officer disallowed the claim of the assessee on the ground that the partners of the firm in 1939 being different from the partners of the firm in 1947, no relief could be given to the applicant.
The Appellate Assistant Commissioner upheld this view.
On appeal to the Income tax Tribunal, this decision was reversed and relief was granted to the applicant under section 25(4).
Before the Tribunal it was argued on behalf of the Commissioner that the partnership was nothing but an association of persons and therefore, in 24 174 order to get relief under section 25(4) of the Act the partners of 1939 must be the same as the partners of 1947 when the firm was succeeded by the company.
The Tribunal repelled this contention and held that the relief contemplated by section 25(4) of the Income tax Act was to be given to the business and not to the persons carrying on the business and that mere changes in the constitution of the firm had to be ignored.
It was not disputed before the Tribunal that the business of the partnership firm of A. W. Figgies & Co. continued as tea brokers right from its inception till the time it was succeeded by the limited company.
The Tribunal took the view that for purposes of incometax the firm was to be regarded as having a separate juristic existence apart from the partners carrying on the business and that the firm could be carried on even if there was a change in its constitution.
At the instance of the appellant the Tribunal stated a case and referred the following question to the High Court under section 66(1) of the Act : "In the facts and circumstances of the case, was the firm as constituted on 31st May, 1947, entitled to the relief under section 25(4) of the Indian Incometax Act ?" The High Court answered the question referred in the affirmative.
It upheld the view taken by the Tribunal.
It was contended before us that the construction placed by the High Court upon section 25(4) of the Act was erroneous and was not warranted by the language of the section and that by reason of the change in the composition of the firm the same firm did not continue throughout and hence there was no right to relief under section 25(4) of the Act in the changed firm.
In our opinion, this contention is without force.
Section 25 (4) is in these terms: "Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939, carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being 175 merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.
" The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change.
It follows from the provisions of the section that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case there is no devolution of the business as a whole.
It is true that under the law of partnership a firm has no legal existence apart from its partners and it is merely a compendious name to describe its partners but it is also equally true that under that law there is no dissolution of the firm by the mere incoming or outgoing of partners.
A partner can retire with the consent of the other partners and a person can be introduced in the partnership by the consent of the other partners.
The reconstituted firm can carry on its business in the same firm 's name till dissolution.
The law with respect to retiring partners as enacted in the Partnership Act is to a certain extent a compromise between the strict doctrine of English common law which refuses to see anything in the firm but a collective name for individuals carrying on business in partnership and the mercantile usage which recognizes the firm as a distinct person or quasi corporation.
But under the Income tax Act the position is somewhat different.
A firm can be charged as a distinct assessable entity as distinct from its 176 partners who can also be assessed individually.
Section 3 which is the charging section is in these terms: Where any Central Act enacts that income tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually.
" The partners of the firm are distinct assessable entities, while the firm as such is a separate and distinct unit for purposes of assessment.
Sections 26, 48 and 55 of the Act fully bear out this position.
These provisions of the Act go to show that the technical view of the nature of a partnership under English law or Indian law cannot be taken in applying the law of incometax.
The true question to decide is one of identity of the unit assessed under the Income tax Act, 1918, which paid double tax in the year 1939, with the unit to whose business the private limited company succeeded in the year 1947.
We have no doubt that the Tribunal and the High Court were right in holding that in spite of the mere changes in the constitution of the firm, the business of the firm as originally constituted continued as tea brokers right from its inception till the time it was succeeded by the limited company and that it was the same unit all through, carrying on the same business, at the same place and there was no cesser of that business or any change in the unit.
Reference was made by Mr. Daphtary to the partnership deed drawn up in 1945.
It was argued that a different firm was then constituted.
The High Court refused to look into this document as it had not been relied upon before the Tribunal and no reference bad been specifically made to it in the order of the Incometax Officer or the Assistant Commissioner.
The Tribunal in spite of this document took the view that under the Partnership Act a firm could be carried on even if there was a change in its constitution.
This 177 document is silent on the question as to what happened to the assets and liabilities of the firm that was, constituted under the deed of 1939.
To all intents and purposes the firm as reconstituted was not a different unit but it remained the same unit in spite of the change in its constitution.
The result is that we see no substantial grounds for disturbing the opinion given by the High Court on the question submitted to it.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
| For purposes of assessment to income tax, a firm is a different entity distinct from its partners, and a mere change in the constitution of the firm does not bring into existence a new assessable unit or a distinct assessable entity.
(1) 67 I.A. 464,481.
172 A firm consisting of three partners, A, B and C, carried on the business of tea brokers and paid income tax under the Income tax Act of 1918.
There were several changes in the personnel of the partners and in 1939 the firm consisted of C, D and E. C retired and in 1945 a new partnership deed was written up between D, E and F and they carried on the business.
In 1947 the partnership was converted into a limited company.
The Income tax authorities refused to give relief under section 25(4) of the Income tax Act as the partners of the firm in 1939 were different from the partners of the firm in 1947: Held, that in spite of the changes in the constitution of the firm, the business of the firm as originally constituted continued right from its inception to the time it was succeeded by the limited company and the firm was the same unit all through; the reconstitution of the firm in 1945 did not make it a different unit, and the firm was therefore entitled to relief under section 25(4) of the Act.
|
Appeals Nos. 71 to 76 of 1953.
Appeals under article 132(1) of the Constitution of India from the Judgment and Order dated 30th January, 1953, of the Orissa High Court in Original Jurisdiction Cases Nos. 13, 14, 15, 16, 25 and 26 of 1952.
The facts of the case appear in the judgment.
B. Somayya (K. B. Krishnamurthi, with him) for the appellant in Civil Appeal No. 71 of 1953.
B. Somayya (D. Narasaraju and N. Y. Ramdas, with him) for the appellant in Civil Appeal No. 72 of 1953.
D. Narasaraju and A. Krishnaswami (N. V. Ramdas, with them) for the appellant in Civil Appeal No. 73 of 1953.
D. Narasaraju (N. V. Ramdas, wit him) :for the appellant in Civil Appeal No. 76 of 1953.
D. V. Narasinga Rao for the appellant in Civil Appeal No. 75 of 1953.
R. Patnaik for the appellant in Civil Appeal No. 74 of 1953.
M. C. Setalvad, Attorney General for India, and Pitambar Misra, Advocate General of Orissa (P. A. Mehta, with them) for the respondent.
May 29.
The Judgment of the Court was delivered by MUKHERJEA J.
4 MUKHERJEA J.
These six appeals arise out of as many applications, presented to the High Court of Orissa, under article 226 of the Constitution, by the proprietors of certain permanently settled estates within the State of Orissa, challenging the constitutional validity of the legislation known as the Orissa Estates Abolition Act of 1952 (hereinafter called "the Act") and praying for mandatory writs against the State Government restraining them from enforcing the provisions of the Act so far as the estates owned by the petitioners are concerned.
The impugned Act was introduced in the Orissa State Legislature on the 17th of January, 1950, and was passed by it on the 28th September, 1951.
It was reserved by the State Governor for consideration of the President and the President gave his assent on 23rd January, 1952.
The Act thus receives the protection of articles 31(4) and 31A of the Constitution though it was not and could not be included in the list of statutes enumerated in the ninth schedule to the Constitution, as referred to in article 31B.
The Act, so far as its main features are concerned, follows the pattern of similar statutes passed by the Bihar, Uttar Pradesh and Madhya Pradesh Legislative Assemblies.
The primary purpose of the Act is to abolish all zemindary and other proprietary estates and interests in the State of Orissa and after eliminating all the intermediaries, to bring the ryots or the actual occupants of the lands in direct contact with the State Government.
It may be convenient here to refer briefly to some of the provisions of the Act which are material for our present purpose.
The object of the legislation is fully set out in the preamble to the Act which discloses the public purpose underlying it.
Section 2(g) defines an "estate" as meaning any land 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 Collector of a district.
The expression "intermediary" with reference to any estate is then defined and it 5 means a proprietor, sub proprietor, landlord, landholder . thikadar, tenure holder, under tenure holder and includes the holder of inam estate, jagir and maufi tenures and all other interests of similar nature between the ryot and the State.
Section 3 of the Act empowers the State Government to declare, by notification, that the estate described in the notification has vested in the State free from all encumbrances.
Under section 4 it is open to the State Government, at any time before issuing such notification, to invite proposals from "intermediaries" for surrender of their estates and if such proposals are accepted, the surrendered estate shall vest in the Government as soon as the agreement embodying the terms of surrender is executed.
The consequences of vesting either by issue of notification or as a result of surrender are described in detail in section 5 of the Act .
It would be sufficient for our present purpose to state that the primary consequence is that all lands comprised in the estate including communal lands, non ryoti lands, waste lands, trees, orchards, pasture lands, forests, mines and minerals, quarries, rivers and streams, tanks, water channels, fisheries, ferries, hats and bazars, and buildings or structures together with the land on which they stand shall, subject to the other provisions of the Act, vest absolutely in the State Government free from all encumbrances and the intermediary shall cease to have any interest in them.
Under section 6, the intermediary is allowed to keep for himself his homestead and buildings and structures used for residential or trading purposes such as golas, factories, mills, etc., but buildings used for office or estate purposes would vest in the Government.
Section 7 provides that an intermediary will be entitled to retain all lands used for agricultural or horticultural purposes which are in his kha 's possession at the date of vesting.
Private lands of the intermediary, which were held by temporary tenants under him, would however vest in the Government and the temporary tenants would be deemed to be tenants under the Government, except where the intermediary himself holds less than 33 acres of land in any capacity.
As 6 regards the compensation to be paid for the compulsory acquisition of the estates, the principle adopted is that the amount of compensation would be calculated at a certain number of years ' purchase of the net annual income of the estate during the previous agricultural year, that is to say, the year immediately preceding that in which the date of vesting falls.
First of all, the gross asset is to be ascertained and by gross asset is meant the aggregate of the rents including all cesses payable in respect of the estate.
From the gross asset certain deductions are made in order to arrive at the net income.
These deductions include land revenue or rent including cesses payable to the State Government, the agricultural 'income tax payable in the previous year, any sum payable as chowkidary or municipal tax in respect of the buildings taken over as office or estate buildings and also costs of management fixed in accordance with a sliding percentage scale with reference to the gross income.
Any other sum payable as income tax in respect of any other kind of income derived from the estate would also be included in the deductions.
The amount of compensation thus determined is payable in 30 annual equated instalments commencing from the date of vesting and an option is given to the State Government to make full payment at any time.
These in brief are the main features of the Act.
There was a fairly large number of grounds put forward on behalf of the appellants before the High Court in assailing the validity of the Act.
It is to be remembered that the question of the constitutional validity of three other similar legislative measures passed, respectively, by the Bihar, Uttar Pradesh and Madhya Pradesh Legislative Assemblies had already come for consideration before this court and this court had pronounced all of them to be valid with the exception of two very minor provisions in the Bihar Act.
In spite of all the previous pronouncements there appears to have been no lack of legal ingenuity to support the present attack upon the Orissa legislation, and as a matter of fact, much of the arguments put forward on behalf of the appellants purported to have been based 7 on the majority judgment of this court in the Bihar appeals, where two small provisions of the Bihar Act were held to be unconstitutional.
The arguments advanced on behalf of the appellants before the High Court have been classified by the learned Chief Justice in his judgment under three separate heads.
In the first place, there were contentions raised, attacking the validity of the Act as a whole.
In the second place, the validity of the Act was challenged as far as it related to certain specified items of property included in an estate, e.g., private lands, buildings, waste lands, etc.
Thirdly, the challenge was as to the validity of certain provisions in the Act relating to determination of compensation payable to the intermediary, with reference either to the calculation of the gross assets or the deductions to be made therefrom for the purpose of arriving at the net income.
The learned Chief Justice in a most elaborate judgment discussed all the points raised by the appellants and negatived them all except that the objections with regard to some of the matters were kept open.
Mr. Justice Narasimham, the other learned Judge in the Bench, while agreeing with the Chief Justice as to other points, expressed,, in a separate judgment of his own, his suspicion about the bona fides of the Orissa Agricultural Income tax (Second Amendment) Act, 1950, and he was inclined to hold that though ostensibly it was a taxation measure, it was in substance nothing else but a colorable device to cut down drastically the income of the intermediaries so as to facilitate further reduction of their net income as provided in clause (b) of section 27(1) of the Act.
He, however, did not dissent from the final decision arrived at by the Chief Justice, the ground assigned being that whenever there is any doubt regarding the constitutionality of an enactment, the doubt should always go in favour of the legislature.
The result was that with the exception of the few matters that were kept open, all the petitions were dismissed.
The proprietors have now come before us on appeal on the strength of certificates granted by the High Court under articles 132 and 133 8 of the Constitution as well as under section 110 of the Code of Civil Procedure.
No contention has been pressed before us on behalf of the appellants attacking the constitutional validity of the Act as a whole.
The arguments that have been advanced by the learned counsel for the appellants can be conveniently divided under three heads: In the first place, there has been an attack on the validity of the provisions of two other statutes, namely, the Orissa Agricultural Income tax (Amendment) Act, 1950, and the Madras Estates Land (Amendment) Act, 1947, in so far as they affect the calculation of the net income of an estate for the purpose of determining the compensation payable under the Act.
In the second place, the provisions of the Act have been challenged as unconstitutional to the extent that they are applicable to private lands and buildings of the proprietors, both of which vest as parts of the estate, under section 5 of the Act.
Lastly, the manner of payment of compensation money, as laid down in section 37 of the Act, has been challenged as invalid and unconstitutional.
Under the first head the appellants ' main contention relates to the validity of the Orissa Agricultural Income tax (Amendment) Act of 1950.
This Act, it is said, is not a bona fide taxation statute at all, but is a colorable piece of legislation, the real object of which is to reduce, by artificial means, the net income of the intermediaries, so that the compensation payable to them under the Act might be kept down to as low a figure as possible.
To appreciate this contention of the appellants, it would be necessary to narrate a few relevant facts.
Under section 27 (1)(b) of the Act, any sum payable in respect of an estate as agricultural income tax, for the previous agricultural year, constitutes an item of deduction which has to be deducted from the gross asset of an estate for the purpose of arriving at its net income, on the basis of which the amount of compensation is to be determined.
The Estates Abolition Bill was published in the local gazette on 3rd January 1950, As has been said 9 already, it was introduced in the Orissa Legislative Assembly on the 17th of January following and it was passed on the 28th September, 1951.
There was an Agricultural Income tax Act in force in the State of Orissa from the year 1947 which provided a progressive scale of taxation on agricultural income, the highest rate of tax being 3 annas in the rupee on a slab of over Rs. 30,000 received as agricultural income.
On 8th January, 1950, that is to say, five days after the publication of the Abolition Bill, an amended agricultural income tax bill was published in the official gazette.
At that time Mr. H. K. Mahtab was the Chief Minister of Orissa and this bill was sponsored by him.
The changes proposed by this Amendment Act were not very material.
The highest rate was enhanced from 3 annas to 4 annas in the rupee and the highest slab was reduced from Rs. 30,000 to Rs. 20,000.
For some reason or other, however, this bill was dropped and a revised bill was_ published in the local gazette on 22nd July, 1950, and it passed into law on 10th of August following.
This new Act admittedly made changes of a very drastic character regarding agricultural income tax.
The rate of taxation was greatly enhanced for slabs of agricultural income above Rs. 15,000 and for the highest slab the rate prescribed was as much as 12 annas 6 pies in the rupee.
It was stated in the statement of objects and reasons that the enhanced agricultural income was necessary for financing various development schemes in the State.
This, it is said, was wholly untrue for it could not be disputed that almost all the persons who came within the higher income group and were primarily affected by the enhanced rates were intermediaries under the Estates Abolition Bill which was at that time before the Select Committee and was expected to become law very soon, and as the legislature had already definitely decided to extinguish this class of intermediaries, it was absurd to say that an increased taxation upon them was necessary for the development schemes.
The object of this amended legislation, according to the appellants, was totally different from what it ostensibly purported 2 10 to be and the object was nothing else but to use it as a means of effecting a drastic reduction in the income of the intermediaries, so that the compensation payable to them may be reduced almost to nothing.
This change in the provisions of the Agricultural Income tax Bill, it is further pointed out, synchronized with a change in the Ministry of the Orissa State.
The original amended bill was introduced by the then Chief Minister, Mr. H. K. Mahtab, who was in favour of allowing suitable compensation to expropriated zemin. dars; but his successor, who introduced the revised bill, was said to be a champion of the abolition of zemindary rights with little or no compensation to the proprietors.
In these circumstances, the argument of the learned counsel is that the agricultural income tax legislation being really not a taxation statute but a mere device for serving another collateral purpose constitutes a fraud on the Constitution and as such is invalid, either in its entirety, or at any rate to the extent that it affects the estate abolition scheme.
We have been referred to a number of decisions on this point where the doctrine of colourable legislation came up for discussion before courts of law; and stress is laid primarily upon the pronouncement of the majority of this court in the case of The State of Bihar vs Maharaja Kameshwar Singh and Others (1) which held two provisions of the Bihar Land Reforms Act, namely, sections 4(b) and 23 (f) to be unconstitutional on the ground, among others, that these provisions constituted a fraud on the Constitution.
The fact that the provisions in the amended Agricultural Income tax Act were embodied in a separate statute and not expressly made a part of the Abolition Act itself should not, it is argued, make any difference in principle.
As the question is of some importance and is likely to be debated in similar cases in future, it would be necessary to examine the precise scope and meaning of what is known ordinarily as the doctrine of "colourable legislation".
It may be made clear at the outset that the doctrine of colourable legislation does not involve any question (1) of bona fides or mala fides on the part of the legislature.
The whole doctrine resolves itself into the, question of competency of a particular legislature to enact a particular law.
If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant.
On the other hand, if the legislature lacks competency, the question of motive does not arise at all.
Whether a statute is constitutional or not is thus always a question of power( ' (1).
A distinction, however, exists between a legislature which is legally omnipotent like the British Parliament and the laws promulgated by which could not be challenged on the ground of incompetency, and a legislature which enjoys only a limited or a qualified jurisdiction.
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 not, in respect to the subject matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers.
Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is to this latter class of cases that the expression "colorable legislation" has been applied in certain Judicial pronouncements.
The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere presence or disguise.
As was said by Duff J. in Attorney General for Ontario vs Reciprocal Insurers and Others(2), "Where the law making authority is of a limited or qualified character it may be necessary to examine with some strictness the substance of the legislation (1) Vide Cooley 's Constitutional Limitations Vol.
I. p. 379.
(2) at 337.
12 for the purpose of determining what is that the legislature is really doing.
" In other words, it is the substance of the Act that is material and not merely the form or outward appearance, and if the subject matter in substance is something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation.
The legislature cannot violate the constitutional prohibitions by employing an indirect method.
In cases like these, the enquiry must always be as to the true nature and character of the challenged legislation and it is the result of such investigation and not the form alone that will determine as to whether or not it relates to a subject which is within the power of the legislative authority(1).
For the purpose of this investigation the court could certainly examine the effect of the legislation and take into consideration its object, purpose or design(1).
But these are only relevant for the purpose of ascertaining the true character and substance of the enactment and the class of subjects of legislation to which it really belongs and not for finding out the motives which induced the legislature to exercise its powers.
It is said by Lefroy in his well known work on Canadian Constitution that even if the legislature avow on the face of an Act that it intends thereby to legislate in reference to a subject over which it has no jurisdiction, yet if the enacting clauses of the Act bring the legislation within its powers, the Act cannot be considered ultra vires(3).
In support of his contention that the Orissa Agricultural Income tax (Amendment) Act of 1950 is a colorable piece of legislation and hence ultra vires the Constitution, the learned counsel for the appellants, as said above, placed considerable reliance upon the majority decision of this court in the case of The State of Bihar vs Sir Kameshwar Singh(4), where two clauses (1) Vide Attorney General for Ontario vs Reciprocal Insurers and Others, at 337.
(2) Vide Attorney General for Alberta vs Attorney General for Canada, [19391 A.C. I 17 at 130.
(3) See Lefroy on Canadian Constitution, page 75.
(4) 13 of the Bihar Land Reform Act were held to be un constitutional as being colourable exercise of legislative power under entry 42 of List III of Schedule VII of the Constitution.
The learned counsel has also referred us, in this connection, to a number of cases, mostly of the Judicial Committee of the Privy Council, where the doctrine of colourable legislation came up for consideration in relation to certain enactments of the Canadian and Australian legislatures.
The principles laid down in these decisions do appear to us to be fairly well settled, but we do not think that the appellants in these appeals could derive much assistance from them.
In the cases from Canada, the question invariably has been whether the Dominion Parliament has, under colour of general legislation, attempted to deal with what are merely provincial matters, or conversely whether the Provincial legislatures under the pretence of legislating on any of the matters enumerated in section 92 of the British North America Act really legislated on a matter assigned to the Dominion Parliament.
In the case of Union Colliery Company of British, Columbia Ltd. vs Bryden( ), the question raised was whether section 4 of the British Columbian Coal Mines Regulation Act, 1890, which prohibited China men of full age from employment in under ground coal working, was, in that respect, ultra vires of the Provincial legislature.
The question was answered in the affirmative.
It was held that if it was regarded merely as a coal working regulation, it could certainly come within section 92, sub section (10) or (13), of the British North America Act; but its exclusive application to Chinamen, who were aliens or naturalised subjects, would be a statutory prohibition which was within the exclusive authority of the Dominion Parliament, con ferred by section 91, sub section (25), of the Act.
As the Judicial Committee themselves explained in a later case(2), the regulations in the British Columbian Act "were not really aimed at the regulation of coal mines at all, but were in truth a device to deprive the Chinese, (1) (2) Vide Cunningham vs Tomeyhomma at 157.
14 naturalised or not, of the ordinary rights of the inhabit ants of British Columbia and in effect to prohibit their continued residence in that province since it prohibited their earning their living in that province.
" On the other hand, in ReInsurance Act of Canada(1), the Privy Council had to deal with the constitutionality of sections 11 and 12 of the Insurance Act of Canada passed by the Dominion Parliament under which it was declared to be unlawful for any Canadian company or an alien, whether a natural person or a foreign company, to carry on insurance business except under a licence from the Minister, granted pursuant to the provisions of the Act.
The question was whether a foreign or British insurer licensed under the Quebec Insurance Act was entitled to carry on business within that Province without taking out a licence under the Dominion Act? It was held that sections 1 1 and 12 of the Canadian Insurance Act, which required the foreign insurers to be licensed, were ultra vires, since in the guise of legislation as to aliens and immigration matters admittedly within the Dominion authority the Dominion legislature was seeking to intermeddle with the conduct of insurance business which was a subject exclusively within the provincial authority.
The whole law on this point was thus summed up by Lord Maugham in Attorney General for Alberta vs Attorney General for Canada(2): "It is not competent either for the Dominion or a Province under the guise, or the pretence, or in the form of an exercise of its own powers to carry out an object which is beyond its powers and a trespass on the exclusive power of the other." The same principle has been applied where the question was not of one legislature encroaching upon the exclusive field of another but of itself violating any constitutional guarantee or prohibition.
As an illustration of this type of cases we may refer to the Australian case of Moran vs The Deputy Commissioner of Taxation for New South Wales(3).
What happened (1)[1932] A.C. 41.
(3) [1940]A.C.838.
(2)[1939] A.C. 117 at 130.
15 in that case was that in pursuance of a joint Commonwealth and States scheme to ensure to wheat growers in all the Australian States "a payable price for their produce " a number of Acts were passed by the Commonwealth Parliament imposing taxes on flour sold in Australia for home consumption, so as to provide a fund available for payment of moneys to wheat growers.
Besides a number of taxing statutes, which imposed tax on flour, the Wheat Industry Assistance Act No. 53 of 1938 provided for a fund into which the taxes were to be paid and of which certain payments were to be made to the wheat growers in accordance with State legislation.
In the case of Tasmania where the quantity of wheat grown was relatively small but the taxes were imposed as in the other States, it was agreed as a part of the scheme and was provided by section 14 of the Wheat Industry Assistance Act that a special grant should be made to Tasmania, not subject to any federal statutory conditions but intended to be applied by the Government of Tasmania, in paying back to Tasmanian millers, nearly the whole of the flour tax paid by them and provision to give effect to that purpose was made by the Flour Tax Relief Act No. 40 of 1938 of the State of Tasmania.
The contention raised was that these Acts were a part of a scheme of taxation operating and intended to operate by way of discriminating between States or parts of States and as such were contrary to the provisions of section 51(ii) of the Commonwealth Australian Constitution Act.
The matter came up for consideration before a full court of the High Court of Australia and the majority of the Judges came to the conclusion that such legislation was protected by Section 96 of the Constitution, which empowered the Parliament of the Commonwealth to grant financial assistance to any State on such terms and conditions as the Parliament thought fit.
Evatt J. in a separate judgment dissented from the view and held that under the guise of executing the powers under section 96 of the Constitution, the legislature had really violated the constitutional prohibition laid down in section 51(ii) of the Constitution.
There was an appeal taken to the Privy Council.
The Privy Council 16 affirmed the judgment of the majority but pointed out that " cases may be imagined in which a purported exercise of the power to grant financial assistance under section 96 would be merely colourable.
Under the guise and pretence of assisting a State with money, the real substance and purpose of the Act might simply be to effect discrimination in regard to taxation.
Such an Act might well be ultra vires the Commonwealth Parliament.
" We will now come to the decision of the majority of this court regarding two clauses in the Bihar Land Reforms Act which seems to be the sheet anchor of the appellants ' case(1).
In that case the provisions of sections 23(f) and 4(b) of the Bihar Land Reforms Act were held to be invalid by the majority of this court not on the ground that, in legislating on these topics, the State legislature had encroached upon the exclusive field of the Central legislature, but that the subjectmatter of legislation did not at all come within the ambit of item No. 42 of List III, Schedule VII of the Constitution under which it purported to have been enacted.
As these sections did not come within entry 42, the consequence was that half of the arrears of rent as well as 12 '% of the gross assets of an estate were taken away, otherwise than by authority of law and therefore there was a violation of fundamental rights guaranteed by article 31 (1) of the Constitution.
This was a form of colourable legislation which made these provisions ultra vires the Constitution.
It may be stated here that section 23 of the Bihar Land Reforms Act lays down the method of computing the net income of an estate or a tenure which is the subject matter of acquisition under the Act.
In arriving at the net income certain deductions are to be made from the gross asset and the deductions include, among others, revenue, cess and agricultural income tax payable in respect of the properties and also the costs of management.
Section 23 (f) provided another item of deduction under which a sum representing 4 to 121 % of the gross asset of an estate was to be (1) Vide The State of Bihar vs Sir Kameshwar Singh, 17 deducted as "costs of works for benefit to the raiyat".
The other provision contained in section 4 (b) provides that all arrears of rent which had already accrued due to the landlord prior to the date of vesting shall vest in the State and the latter would pay only 50% of these arrears to the landlord.
Both these provisions purported to have been enacted under entry 42 of List III Schedule VII of the Constitution and that entry speaks of" principles on which compensation for property acquired is to be determined and the form and manner in which that compensation is to be given.
" It was held in the Bihar case(1) by the majority of this court that the item of deduction provided for in section 23(f) was a fictitious item wholly unrelated to facts.
There was no definable pre existing liability on the part of the landlord to execute works of any kind for the benefit of the raiyat.
What was attempted to be done, therefore, was to bring within.
the scope of the legislation something which not being existent at all could not have conceivable relation to any principle of compensation.
This was, therefore, held to be a colourable piece of legislation which though purporting to have been made under entry 42 could not factually come within its scope.
The same principle was held applicable in regard to acquisition of arrears of rent which had become due to the landlord prior to the date of vesting.
The net result of this provision was that the State Government was given the power to appropriate to itself half of the arrears of rent due to the landlord without giving him any compensation whatsoever.
Taking the whole and returning the half meant nothing more or less than taking the half without any return and this, it was held, could not be regarded as a principle of compensation in any sense of the word.
It was held definitely by one of the learned Judges, who constituted the majority, that item 42 of List III was nothing but the description of a legislative head and in deciding the com petency of the legislation under this entry, the court is not concerned with the justice or propriety of the (1) 3 18 principles upon which the assessment of compensation is directed to be made; but it must be a principle of compensation, no matter whether it was just or unjust and there could be no principle of compensation based upon something which was unrelated to facts.
It may be mentioned here that two of the three learned Judges who formed the majority did base their decision regarding the invalidity of the provision, relating to arrears of rent, mainly on the ground that there was no public purpose behind such acquisition.
It was held by these Judges that the scope of article 31(4) is limited to the express provisions of article 31(2) and although the court could not examine the adequacy of the provision for compensation contained in any law which came within the purview of article 31(4), yet that clause did not in any way debar the court from considering whether the acquisition was for any public purpose.
This view was not taken by the majority of the court and Mr. Narasaraju, who argued the appeals before us, did not very properly pursue that line of reasoning.
This being the position, the question now arises whether the majority decision of this court with regard to the two provisions of the Bihar Act is really of any assistance to the appellants in the cases before us.
In our opinion, the question has, got to be answered in the negative.
In the first place, the line of reasoning underlying the majority decision in the Bihar case(1) cannot possibly have any application to the facts of the present case.
The Orissa Agricultural Income tax (Amendment) Act of 1950 is certainly a legislation on " taxing of agricultural income " as described in entry 46 of List II of the Seventh Schedule.
The State legislature had undoubted competency to legislate on agricultural income tax and the substance of the amended legislation of 1950 is that it purports to increase the existing rates of agricultural income tax, the highest rate being fixed at 12 annas 6 pies in the rupee.
This may be unjust or inequitable, but that does not affect the competency of the legislature.
It cannot be said, as was said in the Bihar case(1), that the legislation purported to be based (1) 19 on something which was unrelated to facts and did not exist at all.
Both in form and in substance the Act was an agricultural income tax legislation and agricultural income tax is certainly a relevant item of deduction in the computation of the net income of an estate and is not unrelated to it as item No. 23(f) of the Bihar Act was held to be.
If under the existing law the agricultural income tax was payable at a certain rate and without any amendment or change in the law, it was provided in the Estates Abolition Act that agricultural income tax should be deducted from the gross asset at a higher rate than what was payable under law, it might have been possible to argue that there being no pre existing liability of this character it was really a non existing thing and could not be an ingredient in the assessment of compensation.
But here the Agricultural Income tax (Amendment) Act was passed in August, 1950.
It came into force immediately thereafter and agricultural income tax was realised on the basis of the amended Act in the following year.
It was, therefore, an existing liability in 1952, when the Estates Abolition Act came into force.
It may be that many of the people belonging to the higher income group did disappear as a result of the Estates Abolition Act, but even then there were people still existing upon whom the Act could operate.
The contention of Mr. Narasaraju really is that though apparently it purported to be a taxation statute coming under entry 46 of List II, really and in substance it was not so.
It was introduced under the guise of a taxation statute with a view to accomplish an ulterior purpose, namely, to inflate the deductions for the purpose of valuing an estate so that the compensation payable in respect of it might be as small as possible.
Assuming that it is so. still it cannot be regarded as a colourable legislation in accordance with the principles indicated above, unless the ulterior purpose which it is intended to serve is something which lies beyond the powers of the legislature to legislate upon.
The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do 20 directly.
If a legislature is competent to do a thing directly, then the mere fact that it attempted to do it in an indirect or disguised manner, cannot make the Act invalid.
Under entry 42 of List III which is a mere head of legislative power the legislature can adopt any principle of compensation in respect to properties compulsorily acquired.
Whether the deductions are large or small, inflated or deflated they do not affect the constitutionality of a legislation under this entry ' The only restrictions on this power, as has been explained by this court in the earlier cases, are those mentioned in article 31(2) of the Constitution and if in the circumstances of a particular case the provision of article 31(4) is attracted to a legislation, no objection as to the amount or adequacy of the compensation can at all be raised.
The fact that the deductions are unjust, exorbitant or improper does not make the legislation invalid, unless it is shown to be based on something which is unrelated to facts.
As we have already stated, the question of motive does not really arise in such cases and one of the learned Judges of the High Court in our opinion pursued a wrong line of enquiry in trying to find out what actually the motives were which impelled the legislature to act in this manner.
It may appear on scrutiny that the real purpose of a legislation is different from what appears on the face of it, but it would be a colourable legislation only if it is shown that the real object is not attainable to it by reason of any constitutional limitation or that it lies within the exclusive field of another legislature.
The result is that in our opinion the Orissa Agricultural Income tax (Amendment) Act of 1950 could not be held to be a piece of colourable legislation, and as such invalid.
The first point raised on behalf of the appellants must therefore fail.
The other point raised by the learned counsel for the appellants under the first head of his arguments relates to the validity of certain provisions of the Madras Estates Land (Orissa Amendment) Act of 1947.
This argument is applicable only to those estates which are 21 situated in what is known as ex Madras area, that is to say, which formerly belonged to the State of Madras but became a part of Orissa from 1st April, 1936.
The law regulating the relation of landlord and tenant in these areas is contained in the Madras Estates Land Act of 1908 and this Act was amended with reference to the areas situated in the State of Orissa by the amending Act XIX of 1947.
The provisions in the amended Act, to which objections have been taken by the learned counsel for the appellants, relate to settlement and reduction of rents payable by raiyats.
Under section 168 of the Madras Estates Land Act, settlement of rents in any village or area for which a record of rights has been published can be made either on the application of the landholder or the raivats.
On such application being made, the Provincial Government may at any time direct the Collector to settle fair and equitable rents in respect of the lands situated therein.
Sub section (2) of section 168 expressly provides that in settling rents under this section, the Collector shall presume, until the contrary is proved, that the existing rate of rent is fair and equitable, and he would further have regard to the provisions of this Act for determining the rates of rent payable by raiyats.
Section 177 provides that when any rent is settled under this chapter, it can neither be enhanced nor reduced for a period of 20 years, except on grounds specified in sections 30 and 38 of the Act respectively.
The amending Act of 1947 introduced certain changes in this law.
A new section, namely, section 168 A was.
introduced and a further provision was added to section 177 as sub section (2) of that section, the original section being renumbered as sub section (1).
Section 168 A of the amended Act runs as follows: (1) Notwithstanding anything contained in this Act the Provincial Government may, on being satisfied that the exercise of the powers hereinafter mentioned is necessary in the interests of public order or of the local welfare or that the rates of rent payable in money or in kind whether commuted, settled or 22 otherwise fixed are unfair or inequitable invest the Collector with the following powers: (a) Power to settle fair and equitable rents in cash; (b) Power, when settling rents to reduce rents if in the opinion of the Collector the continuance of the existing rents would on any ground, whether specified in this Act or not, be unfair and inequitable.
(2) The power given under this section may be made exercisable within specified areas either generally or with reference to specified cases or class of cases.
" Sub section (2) which has been added to section 177 stands thus: " 2(a) Notwithstanding anything in sub section (1) where rent is settled under the provisions of section 168 A, the Provincial Government may either retrospectively or prospectively prescribe the date on which such settlement shall take effect.
In giving retrospective effect the Provincial Government may, at their discretion, direct that the rent so settled shall take effect from a date prior to the commencement of the Madras Estates Land (Orissa Amendment) Act, 1947.
" The appellants ' contention is that by these amended provisions the Provincial Government was authorised to invest the Collector with power to settle and reduce rents, in any way he liked, unfettered by any of the rules and principles laid down in the Act and the Provincial Government was also at liberty to direct that the reduction of rents should take effect retrospectively, even with reference to a period for which rents had already been paid by the tenant.
Under section 26 of the Orissa Estates Abolition Act, the gross asset of an estate is to be calculated on the basis of rents payable by raiyats for the previous agricultural year.
According to the appellants, the State Government made use of the provisions of the amended Madras Estates Land (Orissa Amendment) Act to reduce arbitrarily the rents payable by raiyats and further to make the reduction take effect retrospectively, so that the diminished rents could be reckoned 23 as rents for the previous year in accordance with the provision of section 26 of the Estates Abolition Act and thus deflate the basis upon which the gross asset of an estate was to be computed.
It is conceded by the learned counsel for the appellants that the amendments in the Madras Estates Land Act are no part of the Estates Abolition Act of Orissa and there is no question of any colourable exercise of legislative powers in regard to the enactment of these provisions.
The legislation, however, has been challenged, as unconstitutional, on two grounds.
First of all, it is urged that by the amended sections mentioned above, there has been an improper delegation of legislative powers by the legislature to the Provincial Government, the latter being virtually empowered to repeal existing laws which govern the relations between landlord and tenant in those areas.
The other ground put forward is that these provisions offend against the equal protection clause embodied in article 14 of the Constitution.
It is pointed out that the Provincial Government is given unfettered discretion to choose the particular areas where the settlement of rent is to be made.
The Government has also absolute power to direct that the reduced rents should take effect either prospectively or retrospectively in particular cases as they deem proper.
It is argued that there being no principle of classification indicated in these legislative provisions and the discretion vested in the Government being an uncontrolled and unfetter ed discretion guided by no legislative policy, the pro visions are void as repugnant to article 14 of the Con stitution.
In reply to these arguments it has been contended by the learned Attorney General that, apart from the fact as to whether the contentions are well founded or not, they are not relevant for purposes of the present case.
The arguments put forward by the appellants are not grounds of attack on the validity of the Estates Abolition Act, which, is the subject matter of dispute in the present case, and it is not suggested that the provisions of the Estates Abolition Act relating to 24 the computation of gross asset on the basis of rents payable by raiyats is in any way illegal.
The grievance of the appellants in substance is that the machinery of the amended Act is being utilised by the Government for the purpose of deflating the gross asset of an estate.
We agree with the learned Attorney General that if the appellants are right in their contention, they can raise these objections if and when the gross assets are sought to be computed on the basis of the rents settled under the above provisions.
If the provisions are void, the rents settled in pursuance thereof could not legitimately form the basis of the valuation of the estate under the Estates Abolition Act and it might be open to the appellants then to say that for purposes of section 26 of the Estates Abolition Act, the rents payable for the previous year would be the rents settled under the Madras Estates Land Act, as it stood unamended before 1947.
The learned counsel for the appellants eventually agreed with the views of the Attorney General on this point and with the consent of both sides we decided to leave these questions open.
They should not be deemed to have been de cided in these cases.
The appellants ' second head of arguments relates to two items of property, namely, buildings and private lands of the intermediary, which, along with other interests, vest in the State under section 5 of the Act.
There are different provisions in the Act in regard to different classes of buildings.
Firstly, dwelling houses used by an intermediary for purposes of residence or for commercial or trading purposes remain with him on the footing of his being a tenant under the State in respect to the sites thereof and paying such fair and equitable rent as might be determined in accordance with the provisions of the Act.
In the second place, buildings used primarily as office or kutchery for man agement of the estates or for collection of rents or as rest houses for estate servants or as golas for storing of rents in kind vest in the State and the owner is allowed compensation in respect thereof.
In addition to these, there are certain special provisions in the Act 25 relating to buildings constructed after 1st January, 1946, and used for residential or trading purposes, in respect to which the question of bona fides as to its construction and use might be raised and investigated by the Collector.
There are separate provisions also in respect to buildings constructed before 1st January, 1946, which were not in possession of the intermediary at the date of coming into force of the Act.
The questions arising in regard to this class of cases have been left open by the High Court and we are not concerned with them in the present appeals.
No objection has been taken by the appellants in respect to the provisions of the Act relating to buildings used for residential or trade purposes.
Their objections relate only to the building used for estate or office purposes which vest in the State Government under the provisions of the Act.
In regard to these provisions, it is urged primarily that the buildings raised on lands do not necessarily become parts of the land under Indian law and the legislature, therefore, was wrong in treating them as parts of the estate for purposes of acquisition.
This contention, we are afraid, raises an unnecessary issue with which we are not at all concerned in the present cases.
Assuming that in India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is nothing in law which prevents the State legislature from providing as a part of the estates abolition scheme that buildings, lying within the ambit of an estate and used primarily for management or administration of the estate.
would vest in the Government as appurtenances to the estate itself.
This is merely ancillary to the acquisition of an estate and forms an integral part of the abolition scheme.
Such acquisition would come within article 31(2) of the Constitution and if the conditions laid down in clause (4) of that article are complied with, it would certainly attract the protection afforded by that clause.
Compensation has been pro.
vided for these buildings in section 26(2) (iii) of the 4 26 Act and the annual rent of these buildings determined in the prescribed manner constitutes one of the elements for computation of the gross asset of an estate.
The contention of the appellants eventually narrows down to this that the effect of treating the annual valuation of the buildings as part of the gross asset of the estate in its entirety, leads to unjust results, for if these buildings were treated as separate properties, the intermediaries could have got compensation on a much higher scale in accordance with the slab system adopted in the Act.
To this objection, two answers can be given.
In the first place, if these buildings are really appurtenant to the estate, they can certainly be valued as parts of the estate itself.
In the second place, even if the compensation provided for the acquisition of the buildings is not just and proper, the provision of article 31 (4) of the Constitution would be a complete answer to such acquisition.
As regards the private lands of the proprietor, the appellants have taken strong exception to the provisions of the Act so far as they relate to private lands in possession of temporary tenants.
In law these lands are in possession of the proprietor and the temporary tenants cannot acquire occupancy rights therein, yet they vest, under the Act, in the State Government on the acquisition of an estate, the only exception being made in cases of small land holders who do not hold more than 33 acres of land in any capacity.
Section 8(1) of the Act gives the temporary tenants the right to hold the lands in their occupation under the State Government on the same terms as they held them under the proprietor.
Under the Orissa Tenants Protection Act, which is a temporary Act, the landholder is not entitled to get contractual or competitive rents from these temporary tenants in possession of his private lands and the rent is fixed at two fifths of the gross produce.
It is on the basis of this produce rent which is included in the computation of the gross asset of an estate under section 26 of the Act, that the land holder gets compensation in respect to the private lands in occupation of temporary tenants.
The appellants ' main contention is that although in these lands 27 both the melvaram and kudivaram rights, that is to say, both the proprietor 's as well as the raiyat 's interests are united in the land holder, the provisions of the Act indicated above have given no compensation whatsoever for the kudivaram or the tenant 's right and in substance this interest has been confiscated without any return.
This, in our opinion, is a wrong way of looking at the provisions for compensation made in the Act.
The Orissa Act, like similar Acts passed by the legislatures of other States, provides for payment of compensation on the basis of the net income of the whole estate.
One result of the adoption of this principle, undoubtedly is, that no compensation is allowed in respect of potential values of properties; and those parts of an estate which do not fetch any income have practically been ignorned.
There is no doubt that the Act does not give anything like a fair or market price of the properties acquired and the appellants may be right in their contention that the compensation allowed is inadequate and improper; but that does not affect the constitutionality of the provisions.
In the first place, no question of inadequacy of compensation can be raised in view of the provision of article 31(4) of the Constitution and it cannot also be suggested that the rule for payment of compensation on rental basis is outside the ambit of entry 42 of List Ill.
This point is concluded by the earlier decision of this court in Raja Suriya Pal Singh vs The State of U.P.(1) and is not open to further discussion.
Mr. Narasaraju is not right in saying that the compensation for the private lands in possession of temporary tenants has been given only for the landlord 's interest in these properties and nothing has been given in lieu of the tenant 's interest.
The entire interest of the proprietor in these lands has been acquired and the compensation payable for the whole interest has been assessed on the basis of the net income of the property as represented by the share of the produce payable by the temporary tenants to the landlord.
It is true that the Orissa Tenants Protection Act is a temporary statute, but whether or not it is renewed in future, the (1) 28 rent fixed by it has been taken only as the measure of tile income derivable from these properties at the date of acquisition.
Mr. Narasaraju further argues that his clients are not precluded from raising any objection on the ground of inadequacy of compensation in regard to these private lands by reason of article 31(4) of the Constitution, as the provision of that article is not attracted to the facts of the present case.
What is said is, that the original Estates Abolition Bill, which was pending before the Orissa Legislature at the time when the Constitution came into force, did not contain any provision that the private lands of the proprietor in occupation of temporary tenants would also vest in the State.
This provision was subsequently introduced by way of amendment during the progress of the Bill and after the Constitution came into force.
It is argued, therefore, that this provision is not protected by article 31(4).
The contention seems to us to be manifestly untenable.
Article 31(4) is worded as follows: "If any Bill pending at the commencement of this Constitution in the Legislature of a State has, after it has been passed by such Legislature, been reserved for the consideration of the President and has received his assent, then, notwithstanding anything in this Constitution, the law so assented to shall not be called in question in any court on the ground that it contravenes the provisions of clause (2).
" Thus it is necessary first of all that the Bill, which ultimately becomes law, should be pending before the State Legislature at the time of the coming into force of the Constitution.
That Bill must be passed by the Legislature and then receive the assent of the President.
It is the law to which the assent of the President is given that is protected from any attack on the ground of non compliance with the provisions of clause (2) of article 31.
The fallacy in the reasoning of the learned counsel lies in the assumption that the Bill has got to be passed in its original shape without any change whatsoever, before the provision of clause (4) of article 31 could be attracted.
There is no 29 warrant for such assumption in the language of the clause.
The expression "passed by such Legislature" must mean "passed with or without amendments" in accordance with the normal procedure contemplated by article 107 of the Constitution.
There can be no doubt that all the requirements of article 31(4) have been complied with in the present case and consequently there is no room for any objection to the legislation on the ground that the compensation provided by it is inadequate.
The last contention of the appellants is directed against the provision of the Act laying down the manner of payment of the compensation money.
The relevant section is section 37 and it provides for the payment of compensation together with interest in 30 annual equated instalments leaving it open to the State to make the payment in full at any time prior to the expiration of the period.
The validity of this provision has been challenged on the ground that it is a piece of colourable legislation which comes within the principle enunciated by the majority of this court in the Bihar case referred to above.
It is difficult to appreciate this argument of the learned counsel.
Section 37 of the Act contains the legislative provision regarding the form and the manner in which the compensation for acquired properties is to be given and as such it comes within the clear language of entry 42 of List III, Schedule VII of the Constitution.
It is not a legislation on something which is non existent or unrelated to facts.
It cannot also be seriously contended that what section 37 provides for, is not the giving of compensation but of negativing the right to compensation as the learned counsel seems to suggest.
There is no substance in this contention and we have no hesitation in overruling it.
The result is that all the points raised by the learned counsel for the appellants fail and the appeals are dismissed.
Having regard to some important constitutional questions involved in these cases which needed clearing up, we direct that each party should bear his own costs in these appeals.
Appeals dismissed.
30 Agent for the appellant in Civil Appeal Nos. 71, 72, 73, 75 & 76: M. section K. Sastri.
Agent for the appellant in Civil Appeal No. 74: R.C. Prasad.
| The Bill relating to the Orissa Estates Abolition Act, 1952, was published in the Gazette on the 3rd January, 1950.
It contained a provision that any sum payable for agricultural incomes Tax for the previous year should be deducted from the gross asset of an estate for the purpose of arriving at its not income on the basis on which compensation was payable to the estate owners.
On the 8th January, 1950, a Bill to amend the Orissa Agricultural Income tax Act of 1947 so as to enhance the highest rate of tax from 3 annas in the rupee to 4 annas and reduce the highest slab from Rs. 30,000 to Rs. 20,000 was published in the Gazette.
This Bill was dropped by the next Chief Minister who introduced a revised Bill on the 22nd July, 1950, enhancing the highest rate to 12 annas 6 pies in the rupee and reducing the highest slab to Rs. 15,000 and this was passed into law in August, 1950.
It was contended that the Orissa Agricultural Income tax (Amendment) Act of 1950 was a fraud on the Constitution and as such invalid as it was a colourable legislation to effect a drastic reduction in the compensation payable under the Estates Abolition Act: Held" (i) that the question whether a law was a colourable legislation and as such void did not depend on the. motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgression being veiled by what appears, on proper,examination, to be a mere pretence or disguise.
The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do directly.
2 (ii) The impugned Act was in substance and form a law in respect to the "taxing of agricultural income", as described in entry 46 of List 11 of the Seventh Schedule to the Constitution and, as the State Legislature was competent to legislate on this subject, the Act was not void, and the fact that the object of the legislature was to accomplish another purpose, viz., to reduce the compensation payable under the Estates Abolition Act, cannot render this law a colourable legislation and void as such, as the ulterior object itself was not beyond the competence of the legislature.
(iii) Assuming that in India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is nothing in law which prevents the State Legislature from providing as part of an estate abolition scheme that buildings lying within the ambit of an estate and used primarily for the management or administration of the estate should vest in the Government as appurtenances to the estate itself.
Such acquisition would come within article 31(2) of the Constitution and if the conditions laid down in clause (4) of that article are complied with, it would be protected by that clause even if the compensation provided for is not just and proper.
(iv) The provisions in the Orissa Estates Abolition Act, 1950, relating to private lands in the possession of temporary tenants are not unconstitutional.
Merely because compensation was based on the produce rent payable by the tenants it cannot be said that the landholder was given compensation only for the landholder 's rights and not for the kudivaram (tenant 's) rights also.
(v) The expression "passed by such legislature" in article 31(4) of the Constitution means passed with or without amendments and the fact that the provisions relating to vesting of private lands did not form a part of the Estates Abolition Bill as originally introduced but were added to the Bill after the new Constitution had come into force would not deprive those provisions of the protection of article 31(4) of the Constitution.
(vi) The provision contained in section 37 of the Orissa Estates Abolition Act, 1950, for payment of compensation by 30 annual instalments is not a piece of colourable legislation.
It comes clearly within entry 42 of List III of Schedule VII of the Constitution.
[The question whether the provisions of the Madras Estates Land (Orissa Amendment) Act, 1947, which empowered the Collector to settle and reduce rents were void because they involved an improper delegation of legislative powers to the executive and contravened article 14 of the Constitution was raised, but with the consent of the counsel, their Lordships decided to leave the question open as it did not relate to the validity of the Orissa 3 Estates Abolition Act, which was the subject matter in dispute in the present case].
State of Bihar vs Maharajah Kameshwar Singh and Others ([1952] S.C.R. 889) distinguished.
Surya Pal Singh vs The State of Uttar Pradesh ([1952] S.C.R. 1056) followed.
Attorney General for Ontario vs Reciprocal Insurers and Others ([1924] A.C. 328), Attorney General for Alberta vs Attorney General for Canada ([1939] A.C. 117), Union Colliery Co. of Br.
Columbia Ltd. vs Bryden ([1899] A.C. 580), Cunningham vs Tomeyhomma ([1903] A.C. 151), Be Insurance Act of Canada ([1932] A.C. 41), Moran vs Deputy Commissioner for Taxation, New South Wales ([1940] A.C. 838) referred to.
|
Appeals Nos.
47 to 50 of 1952.
Appeals from the Judgment and Decree dated the 11th May,1950, of the High Court of Judicature at Allahabad (Malik C. J. and Bhargava J.) in Miscellaneous Case No. 134 of 1949 connected with Miscellaneous Case No. 197 of 1948.
G.S. Pathak (G. C. Mathur, with him) for the appellant.
M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the respondent.
September 23.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
This batch of appeals arises out of a reference made to the High Court at Allahabad by the Income tax Appellate Tribunal, Allahabad Bench, under section 26 of the Excess Profits Tax Act, hereinafter referred to as " the Act.
" The assessments challenged in these appeals relate to different chargeable accounting periods but the questions raised are the same in all the cases.
The appellants constitute a Hindu undivided family consisting of four branches representing the four sons of one Sohan Pathak deceased.
The family carried on business at Banaras in money lending and Banaras brocade under the name and style of Sohan Pathak & Sons.
In the assessment relating to the chargeable accounting period ending on October 8, 1943, the appellants alleged that there was a partial partition among the members of the family on July 16, 1943, whereby the Banaras brocade business was divided in equal shares among the four branches and that, on the next day, the adult members of the family formed two partnerships admitting the minors to the benefits thereof, and thereafter carried on business in Banaras 160 brocade under the respective firm names of Sohan Pathak Girdhar Pathak and G. M. Pathak & Co. The appellants claimed that the family as such ceased to carry on business in Banaras brocade after July 16, 1943, though they continued to remain joint in status and that the profits derived by the two partnerships aforesaid after July 17, 1943, could not be assessed as profits of the original joint family business, as the businesses carried on by the two partnerships were distinct and newly started businesses and could neither in law nor in fact be regarded as continuation of the old brocade business.
In support of this claim the appellants strongly relied on the circumstance that the Income tax Officer treated the old business as discontinued by the family after the partial partition and granted relief on that footing under section 25(3) of the Indian Income tax Act in the assessment to income tax of the appellants as a Hindu undivided family.
The Excess Profits Tax Officer, however, rejected the claim as he was of opinion that the main purpose of the partial partition and the creation of the two partnerships was to avoid or reduce the liability of the appellants to excess profits tax, and he made adjustments under section 10 A of the Act by adding to the profits made by the appellants as a joint Hindu family till the date of the partition the profits made by the two firms during the chargeable accounting periods.
The Appellate Assistant Commissioner and the Appellate Tribunal confirmed the finding and order of the Excess Profits Tax Officer, but, at the instance of the appellants, the Tribunal referred the following questions to the High Court for its decision: 1.Whether in view of the fact that the partial partition bad been accepted by the Income tax Officer and the business was treated as having been discontinued for the purpose of assessment under the Income tax Act, the same business could legally be treated as having continued unbroken in respect of the same chargeable accounting period for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act ? 161 2.Whether in the circumstances of the case the effect of the partial partition of the Hindu undivided family on July 16, 1943, and the formation of two different firms was a transaction within the meaning of section 10 A of the Excess Profits Tax Act ? 3.Whether on the facts found by the Tribunal as stated in para.
7 of the statement of the case, it was justified to draw the inference that the main purpose behind the partial partition was the avoidance or reduction of liability to excess profits tax ? The court answered these questions against the appellants but granted leave to appeal to this court.
At a previous hearing of these appeals this court was of opinion that the material facts relating to the partial partition and the formation of the partnership and the findings of the Tribunal in regard thereto had not been clearly stated by the Tribunal in the original statement of the case.
The court said: " While it is true that in one place in the statement of case the Tribunal speaks of the old family brocade business as continuing without a break after the partial partition, reference is made in another place to the assets of that business having been equally divided among the four branches forming the family.
There is thus no clear finding as to how the partition of the brocade business was actually effected whether by a division in shares, each branch holding its share in severalty and the business being carried on as before on a partnership basis, or whether by an actual distribution and allotment of specific assets and liabilities among the branches resulting in the disruption of that business." The court accordingly by its order of January 12, 1953, called for a further and clearer statement of the facts on the points indicated.
The Tribunal has since submitted a supplementary statement of the case fully setting out the details of the partition arrangement and the constitution of the two firms by the members of the family after the partition.
The statement reveals that the bulk of the 162 capital as well as all " the stock in trade, the cash in hand, the cash in banks, all outstandings as on that date as also the sundry liabilities up to that day " were divided amongst each of the 14 coparceners each branch being allotted a four anna share as stated in the schedule filed by the assessees and annexed to the statement, showing that the partition was by specific distribution of the assets and liabilities and not by a division of shares merely.
With the assets and liabilities thus distributed, the two partnerships separately carried on brocade businesses similar to the one carried on by the joint family before the partial partition.
The names of the partners of the two firms are mentioned and it appears that each firm consisted of members representing all the four branches, some of them being adults and some minors, the minors in each case being only admitted to the benefits of the partnerships.
On these facts it was contended by Mr. Pathak on behalf of the appellants that the finding of the Excess Profits Tax Officer that the main purpose of the partial partition and the formation of the new partnerships was to avoid or reduce the liability of the appellants to excess profits tax was not supported by any material on record.
Secondly, assuming that there was material on which the officer could have come to such a finding, the old family business in Banaras brocade having been actually closed down, the officer had no power in assessing the profits of that business to make adjustments under section 10 A of the Act by adding the profits made by the two firms after July 17, 1943.
And lastly, and alternatively, there was undoubtedly a change in the persons carrying on the old business after July 16, 1943, even if it were regarded as still continuing, the Hindu undivided family being a "person" [section 2(17)] distinct from the individuals Composing it, and such business ' must, under section 8(1), be deemed for all the purposes of the Act (except for one not material here) to have been discontinued and a new business to have been commenced, and the same consequences followed.
Mr. Patbak did not argue 163 that the partial partition and the constitution of the two partnerships were not "transactions" within the meaning of section 10 A.
Nor did he insist that the acceptance of the partition and allowance of relief by the Income tax Officer under section 25(4) of the Income tax Act concluded the matter for purposes of section 10 A of the Act, as appears to have been contended in the earlier stages of these proceedings.
The first contention can be disposed of in a few words.
It appears from the facts found by the tax authorities as well as by the Appellate Tribunal that the partial partition and the formation of the partnerships were brought about at a time when the profits of the Banaras brocade business showed a definitely upward trend.
If the main purpose of these transactions was not to evade liability to excess profits tax, the appellants were asked to explain what the purpose was, and they said that they wanted to protect the interests of the minor members whose shares in the partnership assets would not be liable for the losses, if any, of the firms, while the entire family properties would be liable for any loss incurred in the family business.
This explanation was not acceptable because such protection was not thought of when the family business was earning smaller profits and also because, according to the constitution of the partnerships, while each branch was given the same 4as.
interest, the responsibility for losses falling on the branch which had no minor members would be heavier than what would be borne by the branch which had no adult members, a disparity which the purpose put forward by the appellants failed to explain.
In these circumstances we agree with the High Court in holding that there was sufficient material to support the inference drawn by the Appellate Tribunal that the main purpose behind the partial partition and the formation of the partnerships was the avoidance or reduction of liability of the family business to excess profits tax.
The real and substantial question in the appeals is whether in view of the finding of fact that the old family business was wound up, its assets and liabilities 164 having been actually distributed among the coparceners, and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, ' section 10 A has any application to the case.
Question No. 1, which is supposed to have raised this point, was not happily framed.
As already stated, Mr. Pathak did not argue that the Income tax Officer 's finding as to the discontinuance of the old family business precluded the Excess Profits Tax Officer from considering the issue.
It is now well settled that, for the purposes of the Act, a business is a unit of assess ment, and the charging section 4 provides for the tax being levied in respect of the profits of " any business to which this Act applies.
" Section 5 specifies the businesses to which the Act applies, and they are businesses " of which any part of the profits made during the chargeable accounting period is chargeable to income tax " by virtue of certain specified provisions of the Indian Income tax Act, 1922.
There are some provisos to this section, one of which excludes the application of the Act to " any business the whole of the profits of which accrue or arise in a Part B State.
" It is thus manifest that the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period.
In other words, if a business, having been discontinued, earned no profit during the chargeable accounting period in question, no excess profits tax can be charged in respect of such business, and that being the position here as respects the old joint family business in Banaras brocade, the appellants are not liable to be taxed as a Hindu undivided family in respect of that business.
But, argues the learned Attorney General, that result cannot follow by reason of section 10 A of the Act which runs as follows: 10 A. Transactions designed to avoid or reduce liability to exces profits tax. (1) Where the Excess Profits Tax Officer is of the opinion that the main purpose for which any transaction or transactions was or were effected (whether before or after the passing of the 165 Excess Profits Tax (Second Amendment) Act, 1941) was the avoidance or reduction of liability to excess profits tax, he may, with the previous approval of the Inspecting Assistant Commissioner, make such adjustments as respects liability to excess profits tax as he considers appropriate so as to counteract the avoidance or reduction of liability to excess profits tax which would otherwise be effected by the transaction or transactions.
This provision, it is claimed, empowers the Excess Profits Tax Officer to ignore any transaction (s) the main purpose of which was the avoidance or reduction of liability to excess profits tax and to proceed on the footing that such transactions) had not been effected, and, in the present case, the partial partition as well as the subsequent formation of the partnerships having been found to be transactions the main purpose of which was the avoidance or reduction of liability to excess profits tax, the officer had authority to assess the appellants ' old family business in Banaras brocade on the basis of its continued existence during the relevant chargeable accounting periods.
We are unable to accept this contention.
If, under section 4 of the Act read with section 5, the old joint family business cannot be regarded as one " to which this Act applies," section 10 A, one of the provisions of the Act, can have no application to such business.
The learned Attorney General 's argument that sections 4 and 5 must be read along with section 10 A in determining whether the Act applies to any particular business or not involves the fallacy that, in determining the initial issue whether the Act does or does not apply to a given business, you have to look not merely at the provision which defines the scope and application of the Act but other provisions also which presuppose its application.
We are of opinion that the issue whether the Act applies or not to a particular business must be determined solely with reference to section 5, and section 10 A must be construed as 23 166 applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected.
The learned Attorney General conceded that, if a person who had been paying excess profits tax transferred the business to a Part B State, it would not be competent for the Excess Profits Tax Officer to take action under section 10 A to make adjustments on the footing that the assessee continued to carry on his business in the same place as before such transfer, even if it was found that the transfer was effected for the main purpose of avoiding or reducing his liability to excess profits tax.
In that case, the Attorney General admitted, the Officer would be running counter to the express prohibition contained in the proviso to section 5 to which reference has been made and he did not challenge the correctness of a decision to that effect by the Bombay High Court, (Commissioner of Excess Profits Tax, Bombay City vs Moholal Maganlal) (1).
But we fail to appreciate the distinction in principle between that case and the present, for, to both alike the Act is made inapplicable by section 5.
The reasoning of the learned Judges in the Bombay case, namely, that if the Act is inapplicable to a particular business and there would thus be no liability to excess profits tax in respect of that business, no question could arise of avoiding or reducing any liability to excess profits tax under section 10 A, would equally apply to the present case and must lead to the same result.
Reference was made by the Attorney General in the course of his argument to the proviso to section 2(5) which says that " all businesses to which this Act applies carried on by the same person shall be treated as one business for the purposes of this Act.
" We find it difficult to appreciate the bearing of this section on the point at issue.
It is clear that the proviso can operate in respect of businessess to which the Act applies and not otherwise, and it carries the, matter no further.
(1) [1953] 23 167 In the view we have expressed above, it is unnecessary to deal with the alternative contention based on section 8(1) of the Act.
We allow the appeals, set aside the answer made by the High Court to question No. 1 and answer it as follows: In view of the finding of fact that the old joint family business in Banaras brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not legally be treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act.
The judgment of the High Court will stand in other respects.
The appellants will have their costs of the appeals.
Advocates ' fee one set.
Appeals allowed.
| A Hindu undivided family carried on business in money lend ing and brocade.
On the 16th July, 1943, there was a partial partition amongst the members by which the brocade business was divided and its assets and liabilities were partitioned in equal shares between the members of the family.
On the next day the adult members of the family formed two partnerships admitting minors to the benefit thereof, and carried on the brocade business under two separate firm names though they continued to remain joint in status.
The Income tax Officer accepted the partial parti tion and treated the brocade business of the family as having been discontinued, but the Excess Profits Tax Officer held that as the main purpose of the partial partition was avoidance of tax, it was an artificial transaction, and, treating the business as unbroken, made adjustments under section 10 A of the Excess Profits Tax Act, by adding to the profits made by the assessees as a joint family till the date of the partition, the profits made by the two firms after partition during the chargeable accounting period : Held, (i) under sections 4 and 5 of the Excess Profits Tax Act, the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period, and, as the old joint family business in brocade was discontinued and earned no profit during the chargeable accounting period in question, the appellants were not liable to be taxed as a Hindu undivided family in respect of that business; (ii)that the issue whether the Excess Profits Tax Act applies to a particular business must be determined solely with reference to section 5 of the Act, and section 10 A must be construed as applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected; and in view of the finding that the old joint family business in brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not be 159 legally treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act.
|
69 of 1953.
Petition under article 32 of the, Constitution for enforcement of fundamental rights.
1185 section C. Isaacs (Jai Prasad Agarwal, with him) for, the appellant.
K. B. Asthana for respondent No. 1.
section P. Sinha (R. Patnaik, with him) for respondent No. 4. 1953.
May 22.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
This is an application under article 32 of the Constitution seeking protection of the petitioners ' fundamental right under article 15 (1) against alleged violation thereof by the respondents.
The petitioners are three residents of Etah in Uttar Pradesh.
They complain that at the by election to the Municipal Board of Etah held on November 2, 1951, December 8, 1951, and March 17, 1952, at which respondents 4, 11 and 12 were respectively elected, the Petitioners were deprived of their rights to exercise their votes and to seek their election as candidates, as those by elections were held on communal lines on the basis of separate electorates contrary to the provisions of the Constitution.
They also allege that the nomination of respondent 3 as a member of the Board by the Government was an illegal exercise of its powers, as the interest which that respondent was nominated to represent in the Board was already sufficiently represented.
The petition ners accordingly pray for the issue of writs of quo warranto, mandamus and other appropriate writs or directions to respondents 3, 4, 11 and 12 to show under what authority they are acting as members of the Board and to prevent them from acting assuchmembers.
Tbe petitioners also ask for wkits on the District Magistrate and the Civil Judge of Etah, respondents 2 and 13 respectively, directing them not to hold or permit the holding of any meeting of the Board which is said to be illegally constituted.
Now, it cannot be seriously disputed that any law providing for elections on the basis of separate electo rates for members of different religious communities offends against article 15 (1) of the Constitution which runs thus 1186 "15 (1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
" This constitutional mandate to the State not to diis criminate against any citizen on the ground, inter alia, of religion clearly extends to political as.well as to other rights, and any election held after the Constitution in ,pursuance of such a law subject to clause (4) must be held void as being repugnant to the Constitution.
But the question is whether the petitioners are now entitled to the relief they seek in this application under article 32.
It is true, as pointed out in the Cross Roads case(1), that article 32 provides, in some respects, for a more effective remedy through this court than article 226 does through the High Courts.
But the scope of the remedy is clearly narrower in that it is restricted solely to enforcement of fundamental rights conferred by Part III of the Constitution.
Any right, for instance, which the petitioners may have as rate payers in the Municipality to insist that the Board should be legally constituted and that respondents 3, 4, 11 and 12, who are not properly elected or nominated members, should not be permitted to take part in the proceedings of the Board, is outside the purview of article 32, as such right, even if it exists, is not a fundamental right conferred by Part 111.
Petitioners ' learned counsel, however, contended that the fundamental right conferred by article 15 (1) on the petitioners as citizens of India was violated by the elections in question having been held on a basis which discriminated against the petitioners on the ground of their religion in that it precluded them from exercising their franchise in relation to all the candidates and from contesting the elections without regard to the reservation of seats on communal basis.
Learned counsel,also submitted that the delimitation of the constituencies on communal lines was a denial of equality to the petitioners in the matter of their political rights and in that respect also infringed their (1) ; 1187 fundamental right under article 14.
We are unable to accede to these contentions.
It is plain that the fundamental right conferred by article 15(1) is conferred on a citizen as an individual and is a guarantee against his being subjected to discrimination in the matter of the rights, privileges and immunities pertaining to him as a citizen generally.
It is not the petitioners ' case that any discrimination is now being practised or threatened against them.
Their grievance is that the mode of election by separate electorates formed on communal lines involved discrimination against them in relation to seats other than those reserved for their respective communities as to which they could not exercise their right to vote or their right to stand as candidates.
There is no suggestion that the petitioners actually sought to assert those rights by taking appropriate proceedings to have the bar removed and the election conducted in accordance with the Constitution.
In fact, the petitioners acquiesced in the elections being conducted under the old system of separate electorates and felt no discrimination having been practised against them until a no confidence motion was tabled recently against the former Chairman who has since lost his seat as a result of that motion having been carried.
Thus, the infringement of their fundamental rights under article 15(1) and art 61 14, that is, the discrimination practised against them, of which they now complain, related to rights which they in fact never sought to exercise and took no steps to assert, while there was still room for doing so, and for the exercise of which the opportunity is now lost.
But, argues Mr. Isaacs, the election of the respondents 4 11 and 12 being void, they are no better than usurpers, and the petitioners are entitled to prevent them from functioning as members of the Municipal Board.
It may be, as we have already remarked, that the petitioners could claim such relief as ratepayers of the Municipality in appropriately framed proceedings, but there is no question of enforcing petitioners ' funda mental right under article 15(1) or article 14 in such claim, There is still less ground for seeking relief on 1188 that basis aoainst respondent 3 who is only a nominated member.
The petitioners appear to have misconceived their remedy and their application under article 32 must fail.
The petition is dismissed with costs, one sot.
Petition dismissed.
Agent for the petitioners: K. L. Mehta.
Agent for respondent No. I : C. P. Lal.
Agent for respondent No. 4: section P. Varma.
| The petitioners, who were residents of a municipality, alleging that they had been deprived of their rights to exercise their votes and to seek their election as candidates in certain by elections to the Municipal Board, as those by elections were held on communal lines on the basis of separate electorates contrary to the provisions of the Constitution, applied for writs tinder article 32 of the Constitution for preventing the elected candidates from acting as members of the Board, and the District Magistrate and Civil Judge from holding any meetings of the Board: Held, that, though a law which provides for elections on the basis of separate electorates for members of different religious communities offends against article 15(1) of the Constitution and an election held after the Constitution in pursuance of such a law subject to el. 4 would be void, the right which the petitioners claimed as rate payers in the municipality to insist that the Board should be legally constituted and that persons who have not been properly elected should not be allowed to take part in the proceedings of the Board was outside the purview of article 32 of the Constitution inasmuch as such a right, even if it existed, was not a fundamental right conferred by Part III of the Constitution.
Held further, that the alleged infringement of the fundamental rights of the petitioners under article 15(1) and article 14, that is, the discrimination practised against them related to rights which they in fact never sought to exercise and took no steps to assert while there was occasion for doing so and the petitioners were therefore entitled to no relief under article 32 of the Constitution.
|
iminal Appeals Nos.
84 and 85 of 1952.
Appeals by Special Leave granted by the Supreme Court of India on the 17th September, 1951, from the Judgment and Order dated the 6th June, 1951, of the High Court of Judicature at Calcutta in Criminal Appeals No. 175 and 176 of 1950, respectively arising 33 out of the Judgment and Order dated the 29th August, 1950, of the Special Court of Alipur, Calcutta, in Case No. 2 of 1949.
N.C. Chatterjee (section N. Mukherjee and P. N. Mehta, with him) for the appellant in Cr.
Appeall No. 84 of 1952.
Ajit Kumar Dutt and Arun Kumar Dutt for the appellant in Cr.
Appeal No. 85 of 1952.
C. K. Daphtary, Solicitor General for India (B. Sen, with him) for the respondent in both the appeals.
May 22.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
These are connected appeals by special leave from the order of the High Court of Judicature at Calcutta dated January 6, 1951, confirming the conviction of the appellants and the sentences imposed on them by the Special Court, Alipur, Calcutta, constituted under the West Bengal Criminal Law Amendment (Special Courts) Act, 1949.
The first appellant was at all material times the proprietor of the firm of Kedar Nath Mohanlal, Managing Agents of Shiva Jute Press Ltd., an incorporated company having a number of godowns at Cossipore in West Bengal, and the second appellant was the Area Land Hiring and Disposals Officer in the service of the Government of India.
Some of the godowns belonging to the company were requisitioned by the Govern ment for military purposes in 1943 and were released in December, 1945.
The appellants, along with two others who were given the benefit of doubt and acquitted, were charged, with having conspired to cheat, and having cheated, the Government by inducing their officers to pay Rs. 47,550 to the first appellant on behalf of the company as compensation for alleged damage to the godowns on the basis of an assessment made by the second appellant which was false to the knowledge of both the appellants.
It was also alleged that the second appellant recommended 34 the payment of Rs. 1,28,125 to the company for damage caused to the jute stored in the godowns by leakage of rain water through cracks in the roof which the military authorities neglected to repair.
This claim, however, had not been paid as the second appellant 's recommendation was not accepted by the higher authorities who referred it to the Claims Commission for investigation.
The appellants were accordingly charged with having committed offences under sections 120B and 420 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act (Act No. 11 of 1947).
The West Bengal Criminal Law Amendment Act (hereinafter referred to as " the Act ") came into force on June 23, 1949, and, by notification No. 5141 J dated September 16, 1949, the West Bengal Government allotted the case against the appellants and two others to the Special Court constituted by the Government under section 3 of the Act.
The trial commenced on January 3, 1950, and nine prosecution witnesses were examined in chief before January 26, 1950, when the Constitution came into force.
, After some more witnesses were examined, the charges were framed on February 27, 1950.
On June 9, 1950, prosecution evidence was closed and the appellants were examined under section 342 of the Criminal Procedure Code.
On August 29, 1950, the Special Judge delivered judgment convicting the appellants on all the counts and sentenced them to varying terms of rigorous imprisonment and fine.
In addition to the sentences imposed under the ordinary law the first appellant was fined Rs. 50,000 including the sum of Rs. 47,550 received by him, as required by section 9(1) of the Act.
Though the constitutionality of the Act was not challenged in the High Court, Mr. Chatterjee on behalf of the appellants made it the principal issue in these appeals.
He contended that the Special Court had no jurisdiction to try and convict the appellants inasmuch as section 4 of the Act, under which the case was allotted by the State Government to the Special Court offended against article 14 of the Constitution in that 35 it enabled the Government to single out a particular case for reference to the Special Court for trial by the special procedure which denied to persons tried under it certain material advantages enjoyed by those tried under the ordinary procedure.
Learned counsel placed strong reliance on the majority decision of this court in Anwar Ali Sarkar 's case(1) and, indeed, claimed that that decision ruled the present case.
He further urged that the offence under section 5(2) of the Prevention of Corruption Act was triable exclusively by the court of session under item (1) of the last heading of Schedule 11 to the Criminal Procedure Code as the offence is made punishable under that section with imprisonment for seven years, with the result that the trial which was held in Calcutta would have been by jury in the High Court had the ordinary procedure been followed.
Though the trial by the Special Court began before the commencement of the Constitution, its continuance without a jury after the Constitution came into force vitiated the whole trial, as it would riot be possible to introduce the jury at any subsequent stage.
In support of this view he relied on certain observations in the majority judgment of this court in Qasim Razvi 's case(2).
These observations were made by way of explaining the majority decision in Lachmandas Kewalram Ahuja 's case(3) where it was held that proceedings taken prior to the commencement of the Constitution before a Special Court constituted under section 12 of the Bombay Public Safety Act, which was in the same terms as section 5(1) of the West Bengal Act, remained unaffected by the Constitution, though the special procedure provided by the Act was held to be discriminatory following Anwar Ali Sarkar 's case(1).
On the other hand, the Solicitor General on behalf of the Government maintained that the decision was clearly distinguishable and had no application to this case which is governed by the principles enunciated in the Saurashtra case(4).
Before considering the constitutional validity of the Act in the light of the rulings referred to above, (1) ; (2) (3) ; (4) ; 36 it is necessary to have a look at the provisions of the Act in order to ascertain the underlying policy and purpose of the legislation, what evil it seeks to remedy and what means it employs to that end.
The Act is entitled " an Act to provide for the more speedy trial and more effective punishment of certain offences" and the preamble declares that " it is expedient to provide for the more speedy trial and more effective punishment of certain offences " which are set out in the schedule annexed to the Act.
The Provincial Government is empowered to constitute Special Courts of criminal jurisdiction for specified areas and to appoint persons with prescribed qualifications as Special Judges to preside over such courts (sections 2 and 3).
Section 4 defines the jurisdiction of Special Judges and reads as follows: "4.
(1) The Provincial Government may, from time to time by notification in the Official Gazette, allot cases for trial to a Special Judge, and may also from time to time by like notification transfer any case from one Special Judge to another and withdraw any case from the jurisdiction of a Special Judge or make such modifications in the description of a case (whether in the name of the accused or in the charges preferred or in any other manner) as may be considered necessary.
(2)The Special Judge shall have jurisdiction to try the cases for the time being allotted to him under subsection (1) in respect of such of the charges for the offences specified in the schedule as may be preferred against the several accused, and any such case which is at the commencement of this Act or at the time of such allotment pending before any Court or another Special Judge shall be deemed to be transferred to the Special Judge to whom it is allotted.
(3)When trying any such case as aforesaid, a Special Judge may also try any offence whether or not specified in the schedule which is an offence with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial." 37 Section 5 provides for the procedure and powers of Special Judges.
They are empowered to take cognisance of offences without the accused being committed to their court for trial and are required to follow the procedure prescribed by the Criminal Procedure Code for the trial of warrant cases.
The Special Judges may, for reasons to be recorded, refuse to summon any witness, if satisfied after examination of the accused, that the evidence of such witness will not be material and shall not be bound to adjourn any trial for any purpose unless such adjournment is, in their opinion, necessary in the interests of justice.
Except as aforesaid the provisions of the Code are made applicable so far as they are not inconsistent with the Act, and for the purposes of the said provisions the Special Court is to be deemed to be a court of session trying cases without a jury and without the aid of assessors.
By section 6 the High Court is given all the powers conferred on a High Court by Chapters XXXI and XXXII of the Code as if the court of the Special Judge were a court of session.
Section 7 bars the transfer of any case from a Special Judge, and section 8 lays down certain special rules of evidence to be applied in the trial of offences specified in the schedule.
Section 9 enacts certain special provisions regarding punishment.
Sub section (1) provides that a Special Judge shall impose in addition to any sentence authorised by law a further fine which shall be equivalent to the amount of money or value of other property found to have been procured by the offender by means of the offence, and sub section (4) requires the amount of such fine when recovered to be paid to the Government to which the offence caused loss or if there is more than one such Government to distribute the amount among them in proportion to the loss sustained by each.
Section 10 makes the provisions of the Prevention of Corruption Act, 1947, applicable to trials under the Act.
The schedule sets out eight categories of offences triable by the Special Judges.
Paragraphs 1, 2, 3 and 4 relate to offences in which public servants are concerned or loss of Government property or money is involved.
Paragraph 5 relates 38 to offences of forgery,falsification of accounts and such like.
Paragraph 6 includes offences punishable under the Essential Supplies Act, 1946, and paragraph 7 includes those punishable under section 5 of the Prevention of Corruption Act, 1947, while paragraph 8 relates to conspiracies and attempts to commit, and abetments of, any of the offences specified in the earlier paragraphs.
Before examining whether the present case is governed by the ruling in Anwar Ali Sarkar 's case(1) as urged by Mr. Chatterjee or by the principles laid down in the Saurashtra case(2) as the Solicitor General maintained, it will be convenient to dispose of the contention of Mr. Chatterjee about his clients having been denied the advantage of a jury trial after January 26, 1950.
The contention, supported as it is by the observations in Qasim Razvi 's case (3) to which reference has been made, does not, however, carry the appellant 's case far enough, for, the question still remains whether the legislation impugned in the present case was obnoxious to article 14 as section 5(1) of the West Bengal Act was held to be in Anwar Ali Sarkar 's case (1).
This brings us to the main question referred to above which we now proceed to examine.
Now, it is well settled that the equal protection of the laws guaranteed by article 14 of the Constitution does not mean that all laws must be general in character and universal in application and that the State is no longer to have the power of distinguishing and classifying persons or things for the purposes of legislation.
To put it simply, all that is required in class or special legislation is that the legislative classification must not be arbitrary but should be based on an intelligible principle having a reasonable relation to the object which the legislature seeks to attain.
If the classification on which the legislation is founded fulfils this requirement, then the differentiation which the legislation makes between the class of persons or things to which it applies and other persons or things left (1)[1932] S.C.R. 284.
(3)[1953] S.C.R. 589.
(2)[1952] S.C.R. 435.
39 outside the purview of the legislation cannot be regarded as a denial of the equal protection of the law, for, if the legislation were all embracing in its scope, no question could arise of classification being based on intelligible differentia having a reasonable relation to the legislative purpose.
The real issue, therefore, is whether having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions as summarised above, the classification of the offences, for the trial of which the Special Court is set up and a special procedure is laid down, can be said to be unreasonable or arbitrary and, therefore, violative of the equal protection clause.
In considering this question it is hardly necessary to invoke the accepted principle that " If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed " [see per Fazl Ali J. in Chiranjit Lal 's case (1), quoting from Constitutional Law by Willis].
In the present case, it is well known that during the post war period various organisations and establishments set up during the continuance of the war had to be wound up, and the distribution and control of essential supplies, compulsory procurement of food grains, disposal of accumulated stores, adjustment of war accounts and liquidation of war time industries had to be undertaken.
These undertakings gave special opportunities to unscrupulous persons in public services placed in charge of such undertakings to enrich themselves by corrupt practices and antisocial acts thereby causing considerable loss to the Government.
Viewed against this background, it will be seen that by and large the types of offences mentioned in the schedule to the Act are those that were common and widely prevalent during this period, and it was evidently to prevent, or to place an effective check upon, the commission of such offences that the impugned legislation was considered necessary.
It is manifestly the policy of the Act to impose, in addition to the penalties prescribed under the ordinary law, deterrent punishment that would make the offender disgorge the (1) ; , 877.
40 ill gotten gains procured by him by means of the offence, and where such gains were obtained at the expense of Governments, to distribute the amount recovered among them in proportion to the loss caused to them by the offence.
This legislative purpose :is indicated clearly not only in the preamble to the Act but also in section 9 which provides for special compensatory fines equal in value to the amount procured by the offender by means of the offence and, as cases involving such offences were known to be numerous at the time, a speedier trial of such cases than was possible under the normal procedure was presumably considered neces sary.
Hence the system of Special Courts to deal with the special types of offences under a shortened and simplified procedure was devised, and it seems to us that the legislation in question is based on a perfectly intelligible principle of classification having a clear and reasonable relation to the object sought to be attained.
Mr. Chatterjee argues that the offences listed in the schedule do not necessarily involve the accrual of any pecuniary gain to the offender or the acquisition of other property by him or any loss to any Government, and that the classification cannot, therefore, be said to be based on that consideration.
Counsel referred in particular to the offences included in the fifth paragraph, namely, forgery, making and possessing counterfeit seals, falsification of accounts, etc., as instances in point.
It may, however, be observed that section 9(1), which makes it obligatory on the Special Court to impose on persons tried and convicted by it an additional compensatory fine of the kind mentioned above, indicates that only those offences, which, either by themselves or in combination with others mentioned in the schedule, are suspected to have resulted in such pecuniary gain or other advantage and, therefore, to merit the compensatory fine, are to be allotted to a Special Court for trial.
It is well known that acts which constitute the offences mentioned in paragraph 5 are often done to facilitate the perpetration of the other offences specified in the schedule, and they may well have been included as ancillary offences.
Article 14 doer, not insist that legislative classification should be 41 scientifically perfect or logically complete and we cannot accept the suggestion that the classification made in the Act is basedon no intelligible principle and is, therefore, arbitrary.
It has been further contended that even assuming that the scheduled offences and the persons charged with the commission thereof could properly form a class in respect of which special legislation could be enacted, section 4 of the Act is discriminatory and void, vesting, as it does, an unfettered discretion in the Provincial Government to choose any particular "case " of a person alleged to have committed an offence falling under any of the specified categories for allotment to the Special Court to be tried under the special procedure, while other offenders of the same category may be left to be tried by ordinary courts.
In other words, section 4 permits the Provincial Government to make a discriminatory choice among persons charged with the same offence or offences for trial by a Special Court, and such absolute and unguided power of selection, though it has to be exercised within the class or classes of offences mentioned in the schedule, is no less discriminatory than the wider power of selection from the whole range of criminal law conferred on the State Government by the legislation impugned in Anwar Ali Sarkar 's case (1).
The vice of discrimination, it is said, consists in the unguided and unrestricted power of singling out for different treatment one among a class of persons all of whom are similarly situated and circumstanced, be that class large or small.
The argument overlooks the distinction between those cases where the legislature itself makes a complete classi fication of persons or things and applies to them the law which it enacts, and others where the legislature merely lays down the law to be applied to persons or things answering to a given description or exhibiting certain common characteristics, but being unable to make a precise and complete classification, leaves it to an administrative authority to make a selective application of the law to persons or things within the, (1) ; 6 42 defined group, while laying down the standards or at least indicating in clear terms the underlying policy and purpose, in accordance with, and in fulfilment of, which the administrative authority is expected to select the persons or things to be brought under the operation of the law.
A familiar example of this type of legislation is the , which, having indicated in what classes of cases and for what purposes preventive detention can be ordered, vests in the executive authority a discretionary power to select particular persons to be brought under the law.
Another instance in point is furnished by those provisions of the Criminal Procedure Code which provide immunity from prosecution without sanction of the Government for offences by public servants in relation to their official acts, the policy of the law being that public officials should not be unduly harrassed by private prosecution unless in the opinion of the Government, there were reasonable grounds for prosecuting the public servant which accordingly should condition the grant of sanction.
It is not, therefore, correct to say that section 4 of the Act offends against article 14 of the Constitution merely because the Government is not compellable to allot all cases of offences set out in the schedule to Special Judges but is vested with a discretion in the matter.
Whether an enactment providing for special procedure for the trial of certain offences is or is not discriminatory and violative of article 14 must be determined in each case as, it arises, for, no general rule applicable to all cases can safely be laid down.
A practical assessment of the operation of the law in the particular circumstances is necessary.
There are to be found cases on each side of the line: Anwar Ali Sarkar 's case(1) is an authority on one side; the Saurashtra case (2) is on the other.
Apart from dicta here and there in the course of the judgments deliver ed in these cases and the decisions based on them, there is no real Conflict of principle involved in them.
The majority decision in Anwar Ali Sarkar 's case(1) proceeded on the view that no standard was laid down (1) ; (2) ; 43 and no principle or policy was disclosed in the legislation challenged in that case, to guide the exercise of discretion by the Government in selecting a " case" for reference to the Special Court for trial under the special procedure provided in the Act.
All that was relied on as indicative of a guiding principle for selection was the object, as disclosed in the preamble of the West Bengal Act, of providing for the " speedier trial of certain offences ", but the majority of the learned judges brushed that aside as too indefinite and vague to constitute a reasonable basis for classification.
"Speedier trial of offences", observed Mahajan J., " may be the reason and motive for the legislation but it does not amount either to a classification of offences or of cases. .
In my opinion it is no classification at all in the real sense of the term as it is not based on any characteristics which are peculiar to persons or to cases which are to be subject to the special procedure prescribed by the Act" (page 314).
Mukherjea J. said, " I am definitely of opinion that the necessity of a speedier trial is too vague, uncertain and elusive a criterion to form a rational basis for the discrimination made.
The necessity for speedier trial may be the object which the legislature had in view or it may be the occasion for making the enactment.
In a sense quick disposal is a thing which is desirable in all legal proceedings.
This is not a reasonable classification at all but an arbitrary selection" (page 328).
Similar observations are to be found in the judgments of Das and Chandrasekhara Aiyar JJ.
at pages 328 and 352 respectively.
It will be seen that the main reasoning of the majority judges in Anwar Ali Sarkar 's case (1) as disclosed in the passages extracted above is hardly applicable to the statute here in question which is based on a classification which, in the context of the abnormal post war economic and social conditions is readily intelligible and obviously calculated to subserve the legislative purpose.
The case, in our opinion, falls on the same side of the line as the Saurashtra ruling(1) where Anwar Ali Sarkar 's case (1) was distinguished (1) ; (2) ; 44 by three of the learned Judges who were parties to the majority decision in the earlier case.
Fazl Ali J. observed: " There is however one very important difference between the West Bengal Act and the present Ordinance which, in my opinion, does afford such justification (for upholding the Ordinance), and I shall try to refer to it as briefly as possible.
I think that a distinction should be drawn between discrimination without reason and discrimination with reason.
The main objection to the West Bengal Act was that it permitted discrimination without reason or without any rational basis The mere mention of speedier trial ' as the object of the Act did not 'cure the defect ', as the expression afforded no help in determining what cases required speedier trial The clear recital (in the Saurashtra Ordinance) of a definite objective furnishes a tangible and rational basis of classification to the State Government for the purpose of applying the provisions of the Ordinance and for choosing only such offences or cases as affect public safety, maintenance of public order and the preservation of peace and tranquillity.
Thus under section 11, the State Government is expected only to select such offences or class of offences or class of cases for being tried in a Special Court in accordance with the special procedure, as are calculated to affect the public safety, maintenance of public order etc.
" (pages 448 449).
Almost the whole of this reasoning would apply mutatis mutandis to the legislation impugned in the present case.
Mukherjea J., after distinguishing Anwar Ali Sarkar 's case(1) on similar grounds, said: "The object of passing this new Ordinance is identically the same for which the earlier Ordinance was passed, and the preamble to the latter, taken along with the surrounding circumstances, discloses a definite legislative policy which has been sought to be effectuated by the different provisions contained in the enactment.
If special courts were considered necessary to cope with an abnormal situation, it cannot be said that the vesting of authority in the State Government to select offences for trial 45 by such courts is in anyway unreasonable." (Page 463.
Italics mine).
The last sentence aptly applies to the present case.
It will be recalled that section 11 of the Saurashtra Ordinance was in the same terms as section 5(1) of the West Bengal Special Courts Act.
Answering the objection that it committed to the absolute and unrestricted discretion of the executive government the duty of making the selection or classification of cases to be 'placed before the Special Court, the learned Judge observed: "A statute will not necessarily be condemned as discriminatory, because it does not make the classification itself but, as an effective way of carrying out its policy, vests the authority to do it in certain officers or administrative bodies." (Page 459). . .
In my opinion, if the legislative policy is clear and definite and, as an effective method of carrying out that policy, a discretion is vested by the statute upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons, the statute itself cannot be condemned as a piece of discriminatory legislation. . .
In such cases the power given to the executive body would import a duty on it to classify the subject matter of legislation in accordance with the objective indicated in the statute.
The discretion that is conferred on official agencies in such circumstances is not an unguided discretion; it has to be exercised in conformity with the policy to effectuate which the discretion is given, and it is in relation to that objective that the propriety of the classification would have to be tested." (Page 460).
Das J. no doubt laid stress on the fact that although section 1 1 of the Saurashtra Ordinance was in the same terms as section 5(1) of the West Bengal Act, the court had to consider the discriminatory character of the latter enactment in so far as it empowered the West Bengal Government to refer an individual case to the special court for trial, whereas the Saurashtra Government, having by the notification issued under the Ordinance referred only certain offences, the court was called upon to consider the constitutionality of 46 that part of section 1 1 which enabled the executive government to refer "offences, classes of offences and classes of cases".
As regards these three categories, however, the learned Judge held that in the preamble of the old Ordinance, in which the impugned provisions were inserted by way of amendment, there was sufficient indication of policy to guide the executive government in selecting offences or classes of offences or classes of cases for reference to a special court, and concluded thus: "In my judgment this part of the section, properly construed and understood, does not confer an uncontrolled and unguided power on the State Government.
On the contrary, this power is controlled by the necessity for making a proper classifi cation which is to be guided by the preamble in the sense that the classification must have a rational relation to the object of the Act as recited in the preamble.
It is therefore not an arbitrary power.
The legislature has left it to the State Government to classify offences or classes of offences or classes of cases for the purpose of the Ordinance, for the State Government is in a better position to judge the needs and exigencies of the State, and the court will not lightly interfere with the decision of the State Government." (Page 474).
Among the minority Judges both Mahajan and Chandrasekhara Aiyar JJ.
took the view that the preamble which merely referred to the need to provide for public safety, maintenance of public order and the preservation of peace and tranquillity in the State of Saurashtra indicated no principle of classification, as the object was a general one which had to be kept in view by every enlightened Government or system of administration and that every law dealing with commission and punishment of offences was based on this need.
Accordingly, in their view, the decision of the majority in the Saurashtra case(1) marked a retreat from the position taken up by the majority in the earlier case of Anwar Ali Sarkar(2).
However that may be, the majority decision in the Saurashtra case(1) would seem to lay down the principle that if the (1) ; (2) (1952] S.C.R. 284. 47 impugned legislation 'indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the executive authority in accordance with the standard indicated or the underlying policy and object disclosed is not a sufficient ground for condemning it as arbitrary and, therefore, obnoxious to article 14.
In the case of such a statute it could make no difference in principle whether the discretion which is entrusted to the executive Government is to make a selection of individual cases or of offences, classes of offences or classes of cases.
For, in either case, the discretion to make the selection is a guided and controlled discretion and not an absolute or unfettered one and is equally liable to be abused, but as has been pointed out, if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation, such exercise could be challenged and annulled under article 14 which includes within its purview both executive and legislative acts.
Mr. Chatterjee brought to our notice in the course of his argument a decision of the Calcutta High Court in J. K. Gupta vs The.
State (1) where a Special Bench (Harries C. J., Das and Das Gupta JJ.) inclined to the view that the Act now under challenge did not create a valid class or classes of offences, and held that even if the classification were held to be proper, section 4(1) was ultra vires article 14 of the Constitution in that a discretionary power was given to the State to allot cases to the Special Court or not as the State Government felt inclined, and thus to discriminate between persons charged with an offence falling within the same class.
We are unable to share this view.
There may be endless variations from case to case in the facts and circumstances attending the commission of the same type of offence, and in many of those cases there may be nothing that justifies or calls (1) 48 for the application of the provisions of the special Act.
For example, sections 414 and 417 of the Indian Penal Code are among the offences included in the Schedule to the Act, but they are triable in a summary way under section 260 of the Criminal Procedure Code where the value of the property concerned does not exceed fifty rupees.
It would indeed be odd if the Government were to be compelled to allot such trivial cases to a Special Court to be tried as a warrant case with an appeal to the High Court in case of conviction.
The gravity of the particular crime, the advantage to be derived by the State by recoupment of its loss, and other like considerations may have to be weighed before allotting a case to the Special Court which is required to impose a compensatory sentence of fine on every offender tried and convicted by it.
It seems reasonable, if misuse of the special machinery provided for the more effective punishment of certain classes of offenders is to be avoided, that some competent authority should be invested with the power to make a selection of the cases which should be dealt with under the special Act.
For all these reasons we hold that section 4 of the Act, under which the appellants ' case was allotted by the State Government to the Special Court at Alipur is constitutionally valid, and the Special Court had jurisdiction to try and convict the appellants.
As regards the fine of Rs. 50,000, inflicted on the first appellant, Mr. Chatterjee objected that it could not stand to the extent of Rs. 47,550 found to have been received by the first appellant by the commission of the offence, as it is in contravention of article 20 of the Constitution which provides, inter alia, that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
The offences for which the first appellant has been convicted were all committed in 1947, whereas the Act which authorised the imposition of the additional punishment by way of fine equivalent to the amount of money or value of other property found to 49 have been procured by the offender by means of the offence came into force in June, 1949.
Mr. Chatterjee urged that article 20 on its true construction prohibits the imposition of such fine even in cases where the prosecution was pending at the commencement of the Constitution.
This question, which turns on the proper construction of the article, was recently considered and decided in Rao Shiv Bahadur Singh and Another vs The State of Vindhya Pradesh(1), and according to that decision the sentence of fine to the extent of Rs. 47,550 will be set aside in any event.
The appeal will be heard in due course on the merits, and it would be open to the court, in case the conviction is upheld, to, impose such appropriate fine as it should think fit in addition to the sentence of imprisonment.
BOSE J.
It is with the deepest regret that I again find myself compelled to dissent.
While this was still virgin land there was wide scope for many different points of view, but as decision has followed decision the room for divergencies of view has narrowed down to a small field.
I respectfully and loyally accept the decisions of this court which have gone before and I have no desire to reopen matters which must now be taken to be settled.
But these fundamental provisions of the Constitution are, in my opinion, of such deep and far reaching importance and my views about them are so strong that I cannot in all conscience yield a single inch of ground except where compelled to do so.
So far as I am concerned, the only point in this case is where and how far the matters which arise for decision here have been settled by previous authority.
The West Bengal Criminal Law Amendment (Special Courts) Act, 1949, was enacted and came into force before the Constitution.
At that date, the fundamental provisions were not in force and no question of the equal protection clauses arose.
By reason of the ratio decidendi in the previous decisions of this court I respectfully agree that article 14 has no retrospective (1) ; 7 50 operation.
I concede therefore that up to the 26th of January, 1950, the impugned Act was good law, that the Special Court which was constituted to try this case was validly constituted and that the singling out of the appellants by the Provincial Government for trial by the Special Judge in the Special Court under its special procedure was lawful and proper however much this might have savoured of discrimination after the Constitution.
AR that I accept.
Then, as regards the continuation of the trial after the Constitution, I accept on the basis of Habeeb Mahamed 's case(1) and Qasim Razvi 's case(2), where the previous decisions of this court have been examined and explained, that the continuation of the trial after the Constitution can only be impugned if the procedure followed after that date was substantially discriminatory.
In my opinion it was in this case in at least one vital particular.
Had the normal procedure been followed the appellants would have had a jury trial in the High Court at Calcutta.
In Qasim Razvi 's case(2), the majority dealt with the matter thus: "We may mention here that the impossibility of giving the accused the substance of a trial according to normal procedure at the subsequent stage may arise not only from the fact that the discriminatory provisions were not severable from the rest of the Act and the court consequently had no option to continue any other than the discriminatory procedure; or it may arise from something done at the previous stage which though not invalid at that time precludes the adoption of a different procedure subsequently.
Thus, if the normal procedure is trial by jury or with the aid of assessors, and as a matter of fact there was no jury or assessor trial at the beginning, it would not be possible to introduce it at any subsequent stage.
Similarly having once adopted the summary procedure, it is not possible to pass on to a different procedure on a later date.
In such cases the whole trial would have to be condemned as bad.
" That, in my view, covers this case, (1) (2) , 51 On the question of punishment also there is discrimination but that is severable and would in any event be covered by article 20.
I am also compelled to dissent from the view that the impugned Act does not fall foul of the Constitution.
I am aware that this Act has been repealed and so cannot be used again.
But we are now laying down a pattern for the future and I am apprehensive of other Acts being framed along the same lines at some future date because of our decision in this case.
The ratio decidendi of the majority proceeds on the assumption that this Act would have been good even if it had been enacted after the Constitution.
I must with the very greatest respect record a strong and emphatic dissent.
I bow with respect to the wisdom of my colleagues who have laid down the classification test, and indeed I have myself agreed that that is one of the matters to be borne in mind in any given case.
In so far therefore as the Act makes provision for the setting up of Special Courts and of Special Judges, and in so far as it selects classes of offences which can be tried by them, it is, I think, on the basis of our previous decisions, good.
Where, in my opinion, it is bad is in section 4(1) where it empowers the Provincial Government to pick out cases from among the specified classes and to send them to Special Courts and thus discriminate between man and man in the same class.
I am not concerned here with reasonableness in any abstract sense, nor with the convenience of administration nor even with the fact, which may well be the case here, that this will facilitate the administration of justice.
The solemn duty with which I am charged is to see whether this infringes the fundamental provisions of the Constitution; and though I recognise that there is room for divergencies of view, as indeed there must be in the case of these loosely worded provisions, and deeply though I respect the views of my colleagues, I am nevertheless bound in the conscientious discharge of my duty to set out my own strong views so long as there is, in my opinion, scope still left for a divergence of view.
52 In my opinion, the West Bengal legislature could not, and indeed Parliament itself could not, have selected case A and case B and case C and accused X and Y and Z and sent them to the Special Courts for trial leaving others, similarly placed in the same class, for trial by the ordinary courts of the land; and what the legislature itself could not do cannot be done by a delegated authority.
Having made a classification, having given reasons for it, the legislature could not, in my judgment, without assigning reasons for a subclassification, arbitrarily select A, B and C and set them as a class apart in the classification already made.
It is, in my view, as objectionable to make an arbitrary sub classification out of a good classification as it is to make an arbitrary classification in the first instance; and to pick out A, B and C from an already classified class and set them apart for special treatment is nothing more nor less than a fresh classification.
If it is not arbitrary; if it falls within the rules laid down in our previous decisions: good.
If it does not: then bad.
I am clear on the strength of previous authority that if the legislature had done this the Act would have been bad, at any rate to that extent.
It is in my judgment equally bad when the discrimination is left to a lesser power.
I do not think the preventive detention laws afford a proper guide to interpretation here.
They are a class apart and have been engrafted as an exception to the fundamental rights in the very chapter on those rights.
I feel all this is fraught with the gravest danger.
We cannot have Star Chambers or their prototypes in this land; not that these tribunals have any resemblance to Star Chambers as yet.
But we are opening a dangerous door and paving a doubtful road.
If we wish to retain the fundamental liberties which we have so eloquently proclaimed in our Constitution and remain a free and independent people walking in the democratic way of life, we must be swift to scotch at the outset tendencies which may easily widen, as precedent is added to precedent, into that which in the end will be the negation of freedom and equality.
To 53 this extent and with the deepest regret I express my respectful dissent.
In my view, the convictions cannot be upheld and there should be a retrial in the normal way.
Appeals dismissed.
Agent for the appellant in C.A. No. 84: Sukumar Ghose.
Agent for the appellant in C.A. 'No,. 85: R. R. Biswas.
| Whether an enactment Providing for special procedure for the trial of certain offences is or is not discriminatory and violative of article 14 of the Constitution must be determined in each case as it arises, for no general rule applicable to all cases can safely be laid down.
The West Bengal Criminal Law Amendment (Special Courts) Act, 1949, which was entitled an Act to provide for the more speedy trial and more effective punishment of certain offences, and the preamble of which declared that it was expedient to provide for the more speedy trial and the more effective punishment of certain offences which were set out in the Schedule to the Act, empowered the Provincial Government (by sections 2 and 3) to constitute Special Courts of criminal jurisdiction for specified areas and to appoint Special Judges to preside over such courts.
Section 4 31 of the Act provided that the Provincial Government may, from to time, allot cases for trial to a Special Judge, that the Special Judge shall have jurisdiction to try the cases for the time being allotted to him in respect of such of the charges for offences specified in the Schedule as may be preferred against the accused.
The procedure laid down for trial by the Special Judges varied in several particulars from the ordinary trials.
It was contended on behalf of the appellants who were convicted and sentenced by a Special Judge under the Act that section 4 of the Act was void as it contravened article 14 of the Constitution in that it enabled the Government to single out a particular case for reference to the Special Court for trial by a special procedure which denied to the persons tried under it certain material advantages enjoyed by those tried under the ordinary procedure : Held, per PATANJALI SASTRI C.J., MUKHERJEA, GHULAM HASAN and JAGANNADHA DAS JJ.
(VIVIAN BOSE J. dissenting): (i) that when a law like the present one is impugned on the ground that it contravenes article 14 of the Constitution, the real issue to be decided is whether, having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions, the classification of the offences for the trial of which the Special Court is set up and a special procedure is laid down can be said to be unreasonable or arbitrary and therefore violative of the equal protection clause; (ii) having regard to the fact that the types of offences specified in the Schedule to the Act were very common and widely prevalent during the post war period and had to be chocked effectively and speedily tried, the legislation in question must be regarded as having been based on a perfectly intelligent principle of classification, having a clear and reasonable relation to the object sought to be achieved, and it did not in any way contravene article 14 of the Constitution ; (iii)the impugned section cannot be said to contravene article 14 merely because the Government was vested with a discre tion to allot any particular case to the Special Judge and is not required to allot all cases of offences set out in the Schedule, to the Special Court, for if the impugned legislation indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the executive authority in accordance with the standard indicated or the underlying policy and object disclosed, is not a sufficient ground for condemning it as arbitrary and therefore obnoxious to article 14.
In the case of such a statute it makes no difference in principle whether the discretion which is entrusted to the executive Government is to make a selection of individual cases or of offences, classes of offences or classes of cases.
For, in either case, the discretion to make the selection is a guided 32 and controlled discretion and not an absolute or unfettered one and is equally liable to be abused but if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation, such exercise could be challenged and annulled under article 14 which includes within its purview both executive and legislative acts.
VIVIAN BOSE J. (i) Up to the 26th of January, 1950, the impugned law was a good law and the Special Court which was constituted to try the present case was therefore validly constituted and the allotment of this case to a Special Judge for trial was also lawful.
But the continuation of the trial after the 26th January, 1950, when the new Constitution came into force was illegal as the procedure followed after that date was discriminatory at least in one vital particular, namely, the accused did not have the benefit of a trial by jury which they would have had if the normal procedure had been followed.
(ii)The impugned Act in so far as it makes provision for the setting up of Special Courts and of Special Judges and in so far as it selects classes of offences which can be tried by them is, on the basis of the previous decisions of this court, valid, but section 4(1) of the Act is bad in so far as it empowers the Provincial Government to pick out cases from among the specified classes and to send them to the Special Courts and thus discriminate between man and man in the same class.
Held also, by the Court, that under article 20 of the Constitution the accused could not be subjected to any fine greater than that which might have been imposed on them under the law in force when the offence was committed, even though the Act of 1949 empowered the Court to inflict a greater fine.
Rao Shiv Bahadur Singh and Another vs The State of Vindhya Pradesh ([1953] S.C.R. 1188) followed.
Anwar Ali Sarkar 's case ([1952] S.C.R. 284), Quasim Ravi 's case , Lakshmandas Kewalram Ahuja 's case ([1952] S.C.R. 710) explained.
Saurashtra case ([1952] S.C.R. 435) applied.
|
Appeal No. 43 of 1952.
Appeal by special leave granted by the Supreme Court of India on 11th May, 1951, from the Judgment and Order dated 11th December, 1950, of the Hyderabad High Court in Criminal Appeal No 598/6 of 1950.
B.J. M. Mackenna (A. A. Peerbhoy and J. B. Dadachanji, with him) for the appellant.
V.Rajaram Iyer (R. Ganapathy Iyer, with him) for the respondent ' 1953.
October 5.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal by special leave from the judgment of the High Court 'of Judicature of Hyderabad upholding the conviction of the appellant by the Special Judge, Warangal, appointed under Regulation X of 1359 F., under sections 243, 248, 368, 282and 124 of the Hyderabad Penal Code (corresponding to sections 302, 307, 436, 342 and 148, Indian Penal Code) and the respective sentences passed under these sections against him.
The case for the prosecution which has been sub stantially accepted by the Special Judge and by the majority of the High Court is that the appellant was in the year 1947 the Subedar of Warangal within the State of Hyderabad, that on the 9th December, 1947, he proceeded to the village of Gurtur situate within his jurisdiction at about 10 a.m. along with a number of police officials and a posse of police force ostensibly to raid the village in order to arrest certain bad characters, that when a party of villagers, 60 or 70 in number, came out to meet him in order to make representations, he ordered the policemen to open fire on the unarmed and inoffensive villagers, as a result of which tailor Venkayya and Yelthuri Rama died of bullet wounds on the spot, Yelthuri Eradu and Pilli Malladu 477 received bullet wounds and died subsequently, five others received bullet wounds but they recovered, that the appellant gave match boxes and directed the policemen to go into the village and set fire to the houses as a result of which 191 houses were burnt down; that about 70 of the villagers were tied up under the orders of the appellant and taken to Varadhanapeth and were kept under wrongful confinement for some time and thereafter some were released and others were taken to Warangal jail and lodged there; that these acts were done by the appellant without legal authority or legal justification and that he and the two absconding accused were therefore guilty of the offences of murder, attempt to murder, arson,etc.
The prosecution produced 21 witnesses in support of their case, while the accused examined a solitary witness in defence.
The firing by the police, the death of the persons concerned, the arrest of some of the villagers and the burning down of the village houses on the date and the time in question are facts which were not disputed.
But what was alleged by the defence was that the appellant did not give the order to fire, that the villagers were violent and attempted to attack the officials and the police by force and therefore whatever was done was done in self defence.
It was said that the raiders were arrested in due course of law and that the destruction of their houses by fire was committed by the villagers themselves, and that the appellant had gone to the village only to arrest congress mischief mongers and to maintain and enforce law and order.
The Special Judge on the materials before him came to the conclusion that the accused was guilty of the offences with which he stood charged.
On appeal to the High Court of Hyderabad, a bench of two Judges (Sripatrao and Siadat Ali Khan JJ.) delivered differing judgments, Sripatrao J. taking the view that the appeal should be dismissed and the other learned Judge being of the opinion that the appeal ought to be allow he accused acquitted.
The case was then to a third Judge (Manohar Prasad J.) who by 478 a judgment dated 11th December, 1950, agreed with the opinion of Sripatrao J. and dismissed the appeal.
The present appeal has been preferred against the judgment of the majority of the High Court by our leave.
This appeal was in the first instance heard by the Constitution Bencb(1) and at that stage the hearing was confined to certain constitutional points which had been raised by the appellant attacking the legality of the entire trial which resulted in his conviction on the ground that the procedure for trial laid down in Regulation X of 1359 F. became void after the 26th January, 1950, by reason of its conflict with the equal protection clause embodied in article 14 of the Constitution.
The constitutional points raised by the appellant failed and the application preferred by him under article 32 of the Constitution was rejected, and the case was directed to be posted in the usual course for being heard on its merits and it is now before us.
To appreciate the contentions raised on behalf of the appellant, it is necessary to give a short narrative of the incident and the events following thereupon which led to the prosecution of the appellant.
In the first information report lodged against the appellant on the 29th January, 1949, it was said that the following persons accompanied the Subedar that morning: 1.
Moulvi Ghulam Afzal Biabani, Deputy Commissioner, District Police, Warangal.
Abdul Lateef Khan, Circle Inspector of Police, Warangal (absconding accused).
Military Assistant.
Naseem Ahmed, Sub Inspector, Vardhanapeth.
Head Constables of Police, Vardhanapeth.
Abdul Waheed Girdavar.
Abdul Aleem Sahib, Vakil of Hanamkonda.
8. 70 military men, 10 policemen and 1 1 razakers.
It appears that another person Abdul Wahid, Assistant D.S.P also went with this party.
He submi (1) See ; , 479 a diary of the happenings at Gurtur on the same day.
It was briefly stated therein that the people 'rebelled, that they had to open fire and that 70 persons were arrested.
Abdul Lateef Khan, the absconding accused and who was the Circle Inspector of Police, also submitted a diary the same day of the happenings of the 9th, December.
According to him, a crowd of 5,000, pursued the two persons who had been sent to the village and fired at the policemen, threw stones by the slings by which Kankiah the jamedar was injured, that one bullet fell in front of the Nayeb Nazim, that the unlawful assembly shouting slogans against the Government tried to surround the policemen; that the police tried to make them understand but they did not listen, that the crowd was armed with guns, spears, lathis, axes, sickles and slings, and that seeing the delicate circumstances the above mentioned high officers ordered the police to open fire in self defence.
Turab Ali, Sub Inspector of Police, and Station House Officer, Vardhanapeth, on this information recorded the first information report under section 155 of the Hyderabad Penal Code on 9th December, 1947, against Narsivan Reddy, Congress leader of Mangp Banda, and several others under sections 124, 248, 272 and 82 of the Hyderabad Penal Code.
In this report the facts stated by Abdul Lateef, Circle Inspector, were reiterated.
Turab Ali also prepared a panchnama on the same date, the panches being Khaja Ahmed Wali Hyderi revenue inspector, residing at Vardhanapeth and Md. Abdul Wahid, special Girdavar of the same place.
The narrative of events given in the report of Abdul Lateef was recited in the panchnama.
Annexed to this panchnama was a list of the articles and weapons recovered from the individuals arrested on the 9th December, 1947.
The list mentions a number of lathis, spears, sickles, churas, a muzzle loader and some axes.
On the 11th December the appellant sent his report of the incident at Gurtur to Government and in this demi official letter substantially the account given by Abdul Lateef, Circle Inspector, was repeated and the justification for the firing was fully set out.
Whether 480 Moulvi Afzal Biabani, Deputy Commissioner of Police, Warangal, also submitted a report giving his version of the incident to Government or to the InspectorGeneral of Police is a debatable point.
The Government replied to the D. O. letter on 21st January, 1948, and called for a report from the Subedar as to how much collective fine was to be imposed on the villages mentioned in the D. O. letter.
He was also asked to submit a resolution for the appointment of penal police soon so that sanction might be taken according to the procedure.
On 13 March, 1948, a challan was presented against 70 persons arrested on the 9th December, 1947, by the police for offences under sections 124, 248 etc.
in the Court of the Special District Judge of Hyderabad.
The accused were remanded to the Central Jail, Warangal, and it was ordered that if there were any material objects in the case the police should bring them at the next hearing, viz., 31st March, 1948.
On that date the special magistrate committed to the court of session 22 persons to be tried under sections 124, 293 and 248 of the Hyderabad Penal Code.
The rest of the persons arrested were discharged.
The Special Judge fixed the case for hearing on 18th May, 1948.
On that date or some subsequent date in May the police put in an application withdrawing the case.
The court accordingly acquitted all the accused and the proceedings initiated on the first information report of Abdul Lateef, Circle Inspector, thus terminated.
On what grounds the case against these accused persons was withdrawn by the police is a matter which has been left unexplained on the record.
Between the date of the withdrawal of this case and the police action in Hyderabad taken by the Government of India in September, 1948, whether any investigation was made as to the incidents at Gurtur by the Government is not known, but it appears that soon after the police action was over, in November, 1948, a statement was recorded of one Ranganathaswami who is a prosecution witness in the present case by one B. J. Dora Raj, Deputy Collector on 5th November, 1948, in which Ranga natahswami said as follows: 481 "On 9th December, 1947, at about 10 30 a.m. Habeeb Mohammad the Subedar, Biabani the D.S.P., Naseem the Sub Inspector, Abdul Wahid, Special Girdavar and about 70 persons, State Police, Razakars and Abdul Aleem, Vakil, had come to the village Gurtur, taluqa Mahaboobad, dist.
Warangal.
Policemen burnt nearly 200 houses by the order of the D.S.P. It caused damage to the extent of Rs. 1 lakh.
Policemen fired the tailor Ramulu, two dheds, on the order of Biabani, the D.S.P. I do not know the names of the dheds.
Five or six persons were injured.
They were injured by the bullets.
I do not know their names.
At that time there I was doing the work of teaching.
They arrested 70 persons saying that they are Congressmen and carried them forcibly to the Warangal jail .
They snatched gold ornaments of 8 tolas valuing Rs. 400 from the women of Apana Raju and Narsivan Raju.
I incurred loss of Rs. 600 as the house in which I was staying was burnt.
The school peon incurred loss of Rs. 300 as his house was also burnt.
When these above events were happening Subedar was present.
They left the 70 persons who were put into the jail, after taking Rs. 600 bribe.
I myself have seen the above events.
I have read the statement.
It is correct." The statement bears an endorsement of the Deputy Collector to the effect that it was taken before him, and was read over and admitted to be correct.
It also appears that the Assistant Civil Administrator examined 76 villagers on the 28th November, 1948, and their statement is to the following effect : "On 9 12 47 at 9 30 a.m. the Subedar of Warangal, the Deputy Commissioner of Police, Biabani (who has a kanti on his neck), Military Assistant, Circle Inspector of Warangal, Sub Inspector of Police of Vardhanapeth, Head Constable of Police of Vardhanapeth, Girdavar, in the company of military police and 40 persons came to our village.
Came from Okal and stayed out of the city on the west side.
Nearly 100 or 150 persons of the Village went to them.
They fired the guns by which Olsuri Eriah, Olsuri Ramiah 482 and Kota Konda Venkiah died.
Batula Veriah, Basta Pali Maliah, Olsuri Veriah Yeliah, Ladaf Madar Dever Konda Lingiah and Beara Konda Peda Balraju were injured by the bullets.
After this they entered into the village and after taking round in the bazar they got into the houses and looted.
They looted money and clothes.
Then they surrounded the village and gathering the village people took them out of the village.
Made them lie down with face downwards and tied their hands, and kept them in the same condition from 10 a.m. to 3 p.m.
At 3 p.m. the Subedar gave match boxes to his men and told them to burn the houses.
On this they burnt the houses.
The Subedar made us stand and said 'see the Lanka Dahan of your village. ' The Deputy Commissioner also said the same thing.
After this they beat us and took us to Mailaram.
From there they carried us in a car to the police station, Vardhanapeth. .
The whole household utensils of the houses were looted, due to which the damage amounted to one lakh.
It was also learnt that they outraged the modesty of 4 women.
They felt ashamed to state their names before the public.
The women are ashamed to expose the names of the persons concerned.
The names of these women are with the State Congress.
" On the basis of these two statements the Inspector of C.I.D. District Police, one Md. Ibrahim Ghori, wrote to the Sub Inspector of Police of Nalikadur, dist.
Warangal, to issue the first information report for offences committed under sections 248, 312, 331 and 368 of the Hyderabad Penal Code against the Subedar and it was directed that the two sheets of original statements of the complainants should be sent to the court with the first information report and that he would himself investigate the case.
On receipt of this letter the Sub Inspector of Police recorded the first information report for the offences mentioned above on 29th January, 1949, in terms of the above letter.
Though this first information report was recorded on 29th January, 1949, the investigation of the case against the appellant did not start till the 8th August, 49.
What happened in this interval and why the 483 investigation was delayed by a period of over seven months is again, a matter on which no explanation has been furnished on the record and the 'learned Advocate General who appeared On behalf of the State before us was unable to explain the cause, of this delay in the investigation of the crimes alleged to have been committed by the appellant.
On 28th August, 1949, there was an order in terms of section 3 of the Special Tribunal Regulation V of 1358F., which was in force at that time directing the appellant to be tried by Special Tribunal (A).
The Military Governor gave sanction for the prosecution of the appellant on 20th September, 1949.
On 13th December, 1949, a new Regulation, Regulation X of 1359 F., was passed by the Hyderabad Government which ended the Special Tribunals created under the previous regulation and upon such termination, provided for the appointment, powers and procedure of the Special Judge.
On 5th January, 1950, the case of the appellant was made over to Dr. Laxman Rao, Special Judge, who was appointed under the above regulation under an order of the Civil Administrator, Warangal, to whom power under section 5 of the Regulation was delegated and on the same day the Special Judge took cognisance of the offences with the result already indicated.
Mr. McKenna, who argued the appeal on behalf of the Subedar, contended that his client was considerably prejudiced by certain grave irregularities and illegalities committed in the course of the trial by the Special Judge and that there had been a grievous disregard of the proper forms of legal process and violation of principles of criminal jurisprudence in such a fashion as amounted to a denial of justice and that injustice of a serious and substantial character has occurred.
The first ground of attack in this respect was that a number of material witnesses, including Moulvi Afzal Biabani, Deputy Commissioner of Police, who accompanied the Subedar and witnessed the occurrence and who could give a narrative of the events of the 9th December, 1947, were not produced by the prosecution 64 484 though some of them were alive and available, that these witnesses were essential for unfolding the narrative on which the prosecution was based and should have been called by the prosecution, no matter whether in the result the effect of their testimony would have been for or against the case for the prosecution.
The facts relating to Biabani are these: Admittedly he was a member of the party that visited village Gurtur on the fateful morning of the 9th December, 1947.
There can be no doubt that he was a witness of this occurrence and could give a narrative of the incidents that happened there on that day.
In the statement of Ranganathaswami cited above which accompanied the first information report against the appellant it was asserted that the firing took place under the orders of Biabani and the houses were burnt by his order.
In the challan that was prepared on the first information report lodged under the directions contained in the letter of Md. Ibrahim Ghori, Inspector of C.I.D., District Police, against the appellant and the two absconding accused it was alleged that the accused merely on the pretext that the village Gurtur was the headquarters of the communists raided the village with the aid of the armed police force, that the villagers appeared before the accused, but accused I (the appellant) in view of the general policy of the Ittehad ul Muslimeen that the Hindus might be killed and be forced to run away from Hyderabad and to achieve this object opened fire on them, that as a result of the firing two villagers were killed on ' the spot, two of them died in the hospital, five others badly injured, that when the villagers took to their heels the appellant distributed match boxes amongst the police Constables and ordered them to go into the village habitation, loot and burn the houses and molest the villagers.
In this challan the whole burden for the crimes committed on 9th December was thrown on Habeeb Mohammad in spite of the fact that in the documents accompanying the first information report this burden had been thrown on Biabani, the Deputy Commissioner of Police, 485 P.W. 21, the investigating officer, was questioned on this point and he deposed that in the course of the in vestigation the offence was only proved against the appellant and the two absconding accused and that it was not proved that Ghulam Afzal Biabani, Deputy Inspector Genaral of District Police, or Nasim Ahmad, Sub Inspector of Police, or Jamedar of Police, Vardhanapeth, Abdul Wahib, Revenue Inspector, or Abdul Alim, pleader, or the military police had committed any crimes or aided or abetted and for this reason their names were not mentioned therein.
The prose cution in these circumstances in the list of prosecution witnesses mentioned the name of Biabani as P.W. 2, but for some unexplained reason it did not produce him as a witness during the trial.
No explanation has ,been given by the prosecution for withholding this material witness from the court who was the most responsible officer next to the Subedar present at the time of the occurrence and who was at the time of the trial holding an important office under Government and who presumably would have given the court an accurate and true version of what took place.
On 24th March,.
1950, the appellant made an application to the Special Judge alleging, inter alia, that though a number of police officers and other officials were present at the scene of occurrence including Ghulam Afzal Biabani, Kankiah, Abdul Wahid, Girdawar who was then confined in Warangal jail, Naseem Ahmad, Sub Inspector of Police, Vardhanapeth, Khaja Moinuddin, Police Jamedar, Abdul Ghaffar Khan, Reserve District Police Inspector, Turab Ali, Sub Ins pector, Vardbanapeth, and Shaik Chand, Police Inspector, they were neither arrested nor any action taken against any of them, that the investigating officer Ibrahim Ghori and Sub Inspector of Nallikudur police station were not produced in court, that though Kankiah Jamedar was presented to give evidence, Ghulam Afzal Biabani, ex Deputy District Police Commissioner, was not produced.
It was alleged in this application that when this objection was raised on behalf of the accused, the Government Pleader said that 486 they could not produce him, and if the honourable court so desired, it may summon him.
It was further alleged therein that the conduct of the.
prosecution showed that they were endeavouring to incriminate the accused who was not guilty and on the other hand were trying to shield the police constables and officers, and that the Government Pleader had refused to produce the best evidence that could be produced in, the case.
It was stated that in those circumstances it would be in conformity with justice that the court should inquire into the facts and summon the persons mentioned above under section 507 of the Code of Criminal Procedure and record their statements in ' order to find out the real facts.
It was said further that Ghulam Afzal Biabani, ex Deputy District Police Commissioner, who was then in service in the Police Training School, had sent a report with regard to the ' incident to the Inspector General of Police and to the Secretary to Government, Home Department.
On this application the learned Judge recorded the following order: "The application of the accused is not worth con sideration because neither the complainant nor the accused can persuade the court in this way.
This right can be exercised only to settle a defect in the evidence.
Otherwise it is not to be exercised at all.
The right should be exercised only to rectify the defects of any of the parties.
The accused has full right to adduce defence witnesses.
Even after producing the defence evidence, if anything is omitted, the 'court by itself, will settle it.
This application is filed beforehand.
" Order was, however, made to summon the report, if any, made by Ghulam Afzal Biabani.
In his judgment convicting the appellant, regarding Biabani the learned Judge made the following observations: " I regret to learn from Kesera Singh, investigating officer,that such a man is in service, i.e., in the capacity of Principal of Police Training School. 'Will he impart to the would be subordinate officers the same lesson of protection of life and property of royts.
487 And in this case the said Biabani is not challenged only because he is a police officer.
This should not be construed in this sense that as the police left Biabani scot free because they favoured him, so also the court should leave Habeeb Mohamed.
A strange logic that " you left one, therefore I leave the other ' will continue.
" It is difficult to support such observations made behind the back of a person.
Such observations could only be made after giving an opportunity to Biabani to explain his conduct.
Before the High Court Mr. Walford who argued the case stressed the point that the police ought to have produced Ghulam Afzal Biabani to prove the fact that it was the appellant who ordered firing and in the alternative, the court should have summoned him as a court witness.
This argument was disposed of by reference to the decision of their Lordships of the Privy Council in Adel Mohammad vs Attorney General of Palestine(1), wherein it was observed that there was no obligation on the prosecution to tender witnesses whose names were upon the information but who were not called to give evidence by the prosecution, for cross examination by the defence, and that the prosecutor has a discretion as to what witnesses should be called for the prosecution and the court will not interfere with the exercise of that discretion unless it can be shown that the prosecutor has been influenced by some oblique motive.
It was held that in view of these observations it could not be said that the prosecution committed any mistake in not producing Afzal Biabani or that it had been influenced by some oblique motive.
It was further held that no occasion arose for interfering with the discretion exercised by the Special Judge under section 507, Hyderabad Criminal Procedure Code, and that the evidence of this witness could not be regarded as essential for the just decision of the case.
The dissenting Judge, Siadat Ali Khan J., took the view that Biabani was the second top ranking officer at the occurrence and as his report was not forthcoming, (1) A.I.R. 1945 P.C. 42.
488 there was a lacuna in the record and that it was the duty of the court to call him as a witness.
In the judgment of the third Judge, Manohar Prasad J., it is stated that Mr. Murtuza Khan who appeared for the accused did in course of his arguments concede that from the documents filed it appeared that the order of fire was given by the appellant.
Mr. Murtuza Khan who is a retired Judge of the Hyderabad High Court has filed an affidavit contesting the correctness of this observation.
On the question therefore whether the order to fire was given by the appellant we have the solitary testimony of P.W. 10, Kankiah, the police Jamedar, contrary to the statements contained in the document accompanying the first information report; and even in his deposition it is said that the police officer took instructions from Biabani before carrying out the orders of the appellant.
In this situation it seems to us that Biabani who was a top ranking police officer present at the scene was a material witness in the case and it was the bounden duty of the prosecution to examine him, particularly when no allegation was made that if produced, he would not speak the truth; and, in any case, the court would have been well advised to exercise its discretionary powers to examine that witness.
The witness was at the time of the trial in charge of the Police Training School and was certainly available.
In our opinion, not only does an adverse inference arise against the prosecution case from his non production as a witness in view of illustration (g) to section 114 of the Indian Evidence Act, but the circumstance of his being withheld from the court casts a serious reflection on the fairness of the trial.
It seems to us that the appellant was considerably prejudiced in his defence by reason of this omission on the part of the prosecution and on the part of the court.
The reasons given by the learned Judge for refusing to summon Biabani do not show that the, Judge seriously applied his mind either to the Provisions of the section or to the effects of omitting to examine such an important 'Witness.
The terms in which the order of the Special Judge is couched exhibit lack of judicial balance in a matter which required 489 serious consideration.
The reliance placed on the decision of their Lordships of the Privy Council in Adel Mohammad vs Attorney General of Palestine(1) is again misplaced.
That decision has no bearing on the question that arises in the present case.
The case came from Palestine and the decision was given under the provisions of the Palestine Criminal Code Ordinance, 1936.
The contention there raised was that the accused had a right to have the witnesses whose names were upon the information, but were not called to give evidence for the prosecution, tendered by the Crown for cross examination by the defence.
The learned Chief Justice of Palestine ruled that there was no obligation on the prosecution to call them.
The court of criminal appeal held that the strict position in law was that it was not necessary legally for the prosecution to put forward these witnesses.
They, however, pointed out that in their opinion the better practice was that the witnesses should be so tendered at the close of the case for the prosecution so that the defence may cross examine them if they so wish.
Their Lordships observed that there was no obligation on the part of the prosecution to tender those witnesses.
They further observed that it was doubtful whether the rule of practice as expressed by the court of criminal appeal sufficiently recognised that the prosecutor had a discretion as to what witnesses should be called for the prosecution, and the court would not interfere with the exercise of that discretion, unless, perhaps, it could be shown that the prosecutor was influenced by some oblique motive.
No such suggestion was made in that case.
The point considered by their Lordships of the Privy Council there *as somewhat different from the point raised in the present case, but it is difficult to hold on this record that there was no oblique motive of the prosecution in the present case for not producing Biabani as a witness.
The object clearly was to shield him, who possibly might be a co accused in the case, and also to shield the other police officers and men who formed the raiding party.
In our opinion, the true rule (1) A.I.R. 1945 P.C. 42. 490 applicable in this country on the question whether it is the duty of the prosecution to produce material witnesses has been laid down by the Privy Council in the case of Stephen Senivaratne vs The King (1), and it is in these terms : "It is said that the state of things above described arose because of a supposed obligation on the prosecution to call every available witness on the principle laid down in such a case as Ram Ranjan Boy vs Emperor (2), to the effect that all available eye witnesses should be called by the prosecution even though, as in the case cited, their names were on the list of defence witnesses.
Their Lordships do not desire to lay down any rules to fetter discretion on a matter such as this which is so dependent on the particular circumstances of each case.
Still less do they desire to discourage the utmost candour and fairness on the part of those conducting prosecutions; but at the same time they cannot, speaking generally, approve of an idea that a prosecution must call witnesses irrespective of consi derations of number and of reliability, or that a pro secution ought to discharge the functions both of prosecution and defence.
If it does so confusion is very apt to result, and never is it more likely to result than if the prosecution calls witnesses and then proceeds almost automatically to discredit them by cross examination.
Witnesses essential to the unfolding of the narrative on which the prosecution is based, must, of course, be called by the prosecution, whether in the, result the effect of their testimony.is for or against the case for the prosecu tion.
" In a long series of decisions the view taken in India was, as was expressed by Jenkins C.J. in Ram Banjan Boy vs Emperor(2), that the purpose of a criminal trial is not to support at all costs a theory but to investigate the offence and to determine the guilt or innocence of the accused and the duty of a public prosecutor is to represent not the police but the Crown, and this duty should be discharged fairly and fearlessly with a full sense of (1) A.I.R. 1936 P.C. 289.
(2) I.L.R. 491 the responsibility attaching to his position and that he should in a capital case place before the court the testi mony of all the available eye witnesses, though brought to the court by the defence and though they give different accounts, and that the rule is not a technical one, but founded on common sense and humanity.
This view so widely expressed was not fully accepted by their Lordships of the Privy Council in Stephen Senaviratne vs The King(1), that came from Ceylon, but at the same time their Lordships affirmed the proposition that it was the duty of the prosecution to examine all material witnesses who could give an account of the narrative of the events on which the prosecution is essentially based and that the question depended on the circumstances of each case.
In our opinion, the appellant was considerably prejudiced by the omission on the part of the prosecution to examine Biabani and the other officers in the circumstances of this case and his conviction merely based on the testimony of the police jamedar, in the absence of Biabani and other witnesses admittedly present on the scene, cannot be said to have been arrived at after a fair trial, particularly when no satisfactory explanation has been given or even attempted for this omission.
Another grave irregularity vitiating the trial and on which Mr. McKenna laid great emphasis concerns the refusal of the Special Judge to summon six defence witnesses whom the appellant wished to call.
The facts relating to this matter are these: On the 24th March, 1950, the appellant filed a list of defence witnesses containing the following names: 1.
Moulvi Syed Hussain Sahib Zaidi, Ex District Superintendent of Police, Warangal, who was then special officer, Bahawalpur State, Pakistan.
Moulvi Abdul Hamid Khan, Ex Secretary, Revenue Department, at present Minister for Sarf e Khas Mubarak.
Nawab Deen Yar Jung Bahadur, Ex Inspector.
General of Police, Districts and City.
(1) A.I.R. 1936 P.C. 289.
65 492 4.
Moulvi Abdul Rahim, Ex Railway Minister.
Rai Raj Mohan Lal, Ex Law Minister.
Moulvi Zahir Ahmed, Ex Secretary to Government, Home Department, at present residing at London.
The first witness was called to prove that the inhabit ants of Gurtur committed destructive activities and threw stones on the police and that the police fired in self defence by the order of the Deputy Police Commissioner of the District.
It was said that he would also reveal many other facts.
Regarding the second witness, it was said that he would depose as to what happened to the D. O. letter sent by the accused and he would also reveal other facts.
Regarding the third witness, it was said that he would confirm the report of Ghulam Afzal Biabani the Deputy Commissioner of Police and would reveal other facts about Gutur incidents.
About the fourth and fifth witnesses, it was said that they would depose about the accused 's efficiency and his behaviour towards ryots and they would also reveal other facts.
On 14th April, 1950, an application was made by the pleader for the accused that instead of sending for Syed Hussain Zaidi, Superintendent of Police, residing at Pakistan, Abdur Rasheed Khan Sahib, former Assistant Superintendent of Police, Warangal district, may be sent for.
The learned Judge on this made the following order: "This request is improper.
The application of the accused dated 24th March, 1950, about the list of the defence witnesses may be referred.
In it the first name is of Zaidi, the Superintendent of Police.
It is written in it by the accused himself that Mr. Zaidi will say whatever he has heard from the other policemen.
Now I cannot understand when it is written so in the list, how can Abdur Rasheed be called for instead of Zaidi, and what evidence he will give.
So the application to call for Abdur Rasheed Khan Sahib is disallowed.
" Regarding witness No. 2, Abdul Hameed Khan, the learned Judge made the following order 493 "It is stated that he will speak about the efficiency of the accused and also about his behaviour towards his subjects.
Efficiency and behaviour is neither a point at issue in this case, nor a relevant fact, '(section 216, Criminal Procedure Code, and section 110, sections 3 and 4 of the Evidence Act may be referred).
It is also written below it that he will state what action was taken on the D.O. letter of the accused.
No such paper is produced to show as to what has happened to the proceedings, for which Abdul Hameed Khan can be summoned to prove.
Besides this the statement of the accused is in regard to something and witness Abdul Hameed Khan is being summoned for some other thing.
" Regarding the third witness the Judge said as follows: "Nawab Deen Yar Jung Bahadur, former Inspector General of Police, is called for to certify the report of Ghulam Afzal Biabani, Deputy Director of Police.
The report of Ghulam Afzal Biabani was called for from the office of the Inspector General of Police, Home Secretary, and from the office of the Civil Administrator, Warangal.
But from all these offices, we have received replies stating that there is no report of Ghulam Afzal Biabani.
In the light of these replies it is unnecessary to summon Deen Yar Jung Bahadur.
When there is no report, what can Regarding witnesses 4 and 5, the Judge observed as follows: "These witnesses are called for to state about the efficiency and behaviour of the accused.
It is not a point at issue nor a relevant fact.
" Regarding witness 6, the Judge thought that there was no procedure to summon a witness residing in London.
Finally it was observed that "by seeing the list of witnesses and the defence statement of the accused which are many pages, it appears that these applications are, given only to prolong the 'case unjustifiably and to disturb the justice.
These are not worthy be allowed.
So the said application dated 494 24th March, 1950, is disallowed.
" Section 257, Criminal Procedure Code, which corresponds to section 216 of the Hyderabad Criminal Procedure Code is in these terms : " If the accused, after he has entered upon ' his defence, applies to the Magistrate to issue any process for compelling the attendance of any witness for the purpose of examination or cross examination, or the production of any document or other thing, the Magistrate shall issue such process unless he considers that such application should be refused on the ground that it is made for the purpose of vexation or delay or for defeating the ends of justice.
Such ground shall be recorded by him in writing.
" We have not been able to appreciate the view of the learned Judge that the application to summon defence witnesses who were available in Hyderabad was of a vexatious character and its object was to delay or defeat the ends of justice.
There was controversy in the case between the prosecution and the defence about the motive of the accused which was stated by the prosecution to be that in pursuance of the policy of the Ittehad ul Muslimeen, and with the common object of destroying the Hindus and turning them out of Hyderabad the appellant went to this village to achieve that object with the help of the police.
The accused was entitled to disprove the allegation and prove his Version that the village was in a state of rebellion, that the people who came out in a crowd did not come with peaceful motives but they were aggressive and were armed with weapons that he was not inimical to the Hindus, that his behaviour towards them had always been good and his state of mind was not inimical to them and the idea of exterminating them was far from his mind.
Under the provisions of section 53 of the Evidence Act evidence as to the character of an accused is always relevant in a criminal case.
So is the evidence as to the state of his mind.
Evidence as to disturbed condition prevailing at Gurtur and of the destructive activities of its inhabitants was also a relevant fact.
Whatever may be said about the other 495 witnesses, three of the witnesses named in that list were certainly material witnesses for the purpose of the defence.
In criminal proceedings a man 's character is often a matter of importance in explaining his conduct and in judging his innocence or criminality.
Many acts of an accused person would be suspicious or free from all suspicion when we come to know the character of the person by whom they are done.
Even on the question of punishment an accused is allowed to prove general good character.
When the allegation against the appellant was that he was acting in pursuance of the policy of the Ittehad ul Muslimeen that his state of mind was to exterminate the Hindus, he was entitled to lead evidence to show that he did not possess that state of mind ; but that on the other hand, his behaviour towards the Hindus throughout his official career had been very good and he could not possibly think of exterminating them.
But even if the Judge was right in thinking that the evidence of character in this particular case would not have affected materially the result, the evidence of other witnesses who would have deposed as to whether Biabani had submitted a report, and what version he had given, or of those who were able to depose as to the condition of things at Gurtur where the incident took place, or who were in a position to depose from reports already submitted to the Home Department and the Inspector General of Police about the behaviour of the villagers of Gurtur, would have very materially assisted the defence if those witnesses were able to speak in favour of the appellant 's contention.
In our opinion the trial before the Special Judge was vitiated by his failure in summoning the defence witnesses who were available at Hyderabad and who might have materially helped to prove the defence version.
The first witness or his substitute may well have been able to depose as to what happened to, the arms that were alleged to have been captured from the villagers on the 9th December, 1947, and regarding which a panchnama was prepared and as 'to whether they existed in fact or not.
That would have thrown a flood of light on the character of the 496 mob that was fired upon and it may well have transpired from that evidence that the firing was ordered at the instance of Biabani and not at the instance of the accused as alleged in the first instance by Ranganathaswamy.
In the result we are constrained to hold that the accused has been denied the fullest opportunity to defend himself.
Another point that was stressed by the learned counsel for the appellant is that the police investigation into the offences with which the appellant has been charged, after the first information report has been lodged in January, 1949, has been not only of a perfunctory nature but that there has been an unexplained delay of more than six months in making it and this has considerably prejudiced the defence.
It was suggested that during this period most likely the police was cooking evidence against the accused without making any entries in the case diaries of statements made by the villagers.
On this question it is necessary to set out a part of the statement of P.W. 21, the investigating officer, on which reliance was placed to support this contention.
In cross examination the witness said as follows: "I went for investigation in the month of Mehir 1358 F. (August, 1949) Union officers did not investigate prior to my investigation; not even any ' Collector undertook any investigation Mohd. Ibrahim Ghori, Inspector, C.I.D., informed Sub Inspector of Nallikadur through a D. O. dated the 29th Isfandar, 1358 F., to issue an information report.
I have no knowledge which officer ordered Mohd. Ibrahim Ghori to investigate and who signed on it.
Superintendent of C.I.D. Police whose name I do not, remember now gave order to Mohd. Ibrahim Ghori to investigate the facts.
Now the case diary is not with me The names of Mohd. Ibrahim and Achal Singh are not mentioned in the witnesses lists of A & B Charges under sections 312 and 331 are mentioned in the report, but during my investigation these offences were not proved The Superintendent of C.I.D. Police gave me order to 497 investigate but I do not remember the date of that order now.
I prepared panchnamas on 8th Mehar, 1358 F. probably I reached Gurtur one or two days earlier.
I finished circumstantial investigation with in eight days.
Afterwards proceedings for permission were continued.
At last on 28th August, 1949, the Civil Administrator gave order to file a challan. . .
In the course of my investigation, it was proved that accused Habeeb Mohammad, Abdul Latif Khan and Abdul Wahid had committed crimes.
It was not proved during the course of my investigation that Ghulam Afzal Biabani, Deputy I. G. of District Police, Assistant of Force, Nasim Ahmad Saheb, Sub Inspector of Police, Vardhanapeth, Jamedar of Police, Vardhanapeth, Abdul Wahid, Revenue Inspector, Abdul Alim Saheb, pleader, Hanamkonda, 70 military men and police and Razakars bad committed crimes or aided and abetted.
Therefore their names were not mentioned in the challan.
The crimes against them are not proved means that they are not identified ; the witnesses are not acquainted with them; so they are not prosecuted.
Though in the information report 70 military men were mentioned I found in the course of my investigation 70 policemen only.
I could not make out the identity of these policemen but I came to know that they belonged to Warangal district police force.
I do not know how many of them were Hindus and how many were Muslims.
But the names of Kankiah, police jamedar (head constable) and Abdul Latif Khan, Circle Inspector, were evident from the diary ; therefore it is produced as evidence.
On enquiry, Kankiah said to me that he could not identify them now and that he could not recollect the number of policemen who went along with him (Kankiah) to Vardhanapeth.
I could not see the register at Superintendent 's office to ascertain who went there because it was destroyed during the police action.
When I asked the line inspector in this connection he replied that he could not even say whether the register was destroyed and that he could not remember the names now.
As I could not gather any information from them, I did not refer their names in the case diary .
I had not 498 even mentioned about line inspector in the case diary because I considered it unnecessary.
From other source also, I could not make out the identity of these 70 men.
Ghulam Afzal Biabani, Deputy Inspector General of Police, is alive and in service and I have heard that he is now the Principal of the Police Training School.
I cannot tell who was Assistant of Force.
I do not know the whereabouts of Nasim Ahmad as well as about his post.
I did not make enquiries about Police Jamedar of Vardhanapeth who was mentioned in the information report, in regard to his identity and whether he is alive or dead because I could not find out his name from my witnesses.
Further I do not know who was Shaik Chand.
But I came to know from Kankiah that Shaik Chand was present on the scene of occurrence.
Now I do not know about the whereabouts of Shaik Chand or about his job.
None of the other witnesses recognised Shaik Chand and that I had not paraded him before the witnesses because I do not know his whereabouts.
Though Jamedar Kankiah deposed that Abdul Ghaffar, Police Inspector, was present on the scene of occurrence the other witnesses were not acquainted with him.
Whether Abdul Majid, Revenue Inspector, was on the place of occurrence or not, I could not make out and further whether he is alive or dead, too, I could not make out.
Except Ghulam Afzal Biabani, I did not examine any of the other men, i.e., Assistant of Force, Nasim Ahmed, Police Jamedar of Vardbanapeth, Abdul Wahid, Revenue Inspector and others.
I remember that after circum stantial investigation at Gurtur, I went to Hyderabad and enquired the facts to Ghulam Afzal Biabani orally; I did not take any statement from him.
Whatever I enquired from him I entered in the case diary.
I do not know what Ghulam Afzal Biabani reported to the high authority and whether he had reported it or not reported at all.
I did not question him about it.
I do not remember the name of the police patel of Gurtur village.
I did not take his statement and he did not give any report in regard to this occurrence.
Guns were not recovered because the 499 incident occurred one year ago and persons were not identified.
" It is apparent from this statement that the investigation conducted by P.W. 21 was of a very perfunctory character.
Apart from P.W. 10 Kankiah, none of the policemen or other I officers or panches present at the scene of occurrence were examined and even their whereabouts were not investigated.
This is all due to the circumstance that though the depositions of the villagers were recorded in November, 1948, against the conduct of the appellant and though the first information report against him was lodged in January, 1949, for some reason of which no plausible or satisfactory explanation has been suggested, the matter was not investigated and relevant evidence as to this incident, whether for or against the appellant, was not recorded for a period of over six months.
It is not unreasonable to presume that during this period of seven or eight months that evidence became either unavailable or the villagers after this delay in investigation were not able to satisfactorily identify any of the persons who were present on the occasion.
It seems to us that there is force in the contention that a good deal of material evidence was lost and considerable material that might have been helpful to the case of the defence or which would have fully established the part played by the accused, was in the meantime lost.
In this situation the learned counsel in the courts below as well as in this court laid emphasis on the point that the case diaries were not brought into court till ,after the close of the case and they were withheld to avoid any controversy of this nature and this omission had also resulted in a trial which was perfunctory and, prejudicial to the accused.
During the examination of the investigating officer the question was put to him whether he had the case diaries.
The cross examining counsel wanted to elicit from him certain materials about the conduct of the investigation after he had refreshed his memory from those diaries, but P.W. 21 deposed that he had not the diaries with him and the matter was closed at 66 500 that stage.
On 12th April, 1950, an application was made to the court asking for copies of statements of P.Ws.
recorded by the police.
This application was obviously a belated one as the accused had no right to get the copies after the statements of those witnesses had been recorded by the Judge.
The diaries were brought into court on 18th April, 1950.
The learned Special Judge in his judgment on this point said as follows: "I have sent for the case diary relating to Superin tendent of C.I.D. in confidential on the prayer of the accused.
I have seen it intently.
Statements therein are almost the same as are deposed in the court.
The statements of witnesses would not become unreliable even in view of the entries made in the case diary.
" Section 162, Criminal Procedure Code, which concerns police diaries and the use that can be made of them, is in these terms: " No statement made by any person to a police officer in the course of an investigation under this Chapter shall, if reduced to writing, be signed by the person making it; nor shall any such statement or any record thereof, whether in a police diary or otherwise, or any part of such statement or record, be used for any purpose (save as hereinafter provided) at any inquiry or trial in respect of any offence under investigation at the time when such statement was made : Provided that, when any witness is called for the prosecution in such inquiry or trial 'Whose statement has been reduced into writing as aforesaid, the Court shall on the request of the accused refer to such writing and direct that the accused be furnished with a copy thereof, in order that any part of such statement, if duly proved, may be used to contradict such witness in the manner provided by section 145 of the .
When any part of such statement is so used, any part thereof may also be used in the re examination of such witness, but for the purpose only of explaining any matter referred to in his cross examination.
" 501 Section 172 provides that any criminal court may send for the police diaries of a case under inquiry or trial in such court and may use such diaries, not as evidence in the case but to aid if in such inquiry or trial.
It seems to us that the learned Judge was in error in making use of the police diaries at all in his judgment and in seeking confirmation of his opinion on the question of appreciation of evidence from statements contained in those diaries.
The only proper use he could make of these diaries was the one allowed by section 172, Criminal Procedure Code, i.e., during the trial he could get assistance from them by suggesting means of further elucidating points which needed clearing up and which might be material for the purpose of doing justice between the State and the accused.
This he did not do because the diaries were not before him.
It was pointed out in Rex vs Mannu(1) by a full court that a special diary may be used by the court to assist in an inquiry or trial by suggesting means of further elucidating points which need clearing up and which are material for the purpose of doing justice between the Crown and the accused but not as containing entries which can by themselves be taken to be evidence of any date, fact or statement therein contained.
The police officer who made the diary may be furnished with it but not any other witness.
The Judge made improper use of the diary by referring to it in his judgment and by saying that he intently perused it and the statements of witnesses taken in court were not inconsistent with those that were made by the witnesses before the police officer.
It is difficult to say to what extent the perusal of the case diaries at that stage influenced the mind of the judge in the decision of the case.
It may well be that that perusal strengthened the view of the judge on the evidence against the appellant and operated to his prejudice.
If there was any case in which it was necessary to derive assistance from the case diary during the trial it was this case and the investigating officer who appeared in the witness box instead of giving unsatisfactory answers to 2I.L.R. 19 All,390.
502 the questions put to him might well have given accurate answers by refreshing his memory from those diaries and cleared up the lacunae that appear in the prosecution case.
It was next contended that a number of documents that the accused wanted for his defence were not produced by the prosecution and were intentionally withheld.
Reference in this connection may be made to an application submitted by the accused to the court on the 20th April, 1950.
It reads thus : "As many documents were called for in defence of the accused, it was replied from the police or from the Home Department that the documents in question were either destroyed in the course of the police action, or as they are confidential, could not be sent.
You are requested to review the excuses put forth by the police or other departments.
In Warangal proper neither any firing took place nor any offices were burnt.
I and Taluqdar Sahib lived in the headquarters for many months after the police action.
Taluqdar Sahib lived for four months after the police action, and I lived there for nearly one month after the police action.
Each and every document of my office and Taluqdar 's office are safe and which can be ascertained by the Civil Administrator, Warangal, himself.
This is my last prayer to you to send immediately today for summary of intelligence of second, third and fourth weeks of the month of Bahman, 1357 F., from the office of the Peshi of Mr. Obal Reddy, the District Superintendent of Police, Warangal.
These weekly reviews are confidential which are prepared at the C.I.D. branch of the office of the Inspector General of Police, and despatched to the districts.
The District Superintendents of Police used to send these reviews to the Deputy Commissioner of Police, Subedars and Taluqdars.
The Gurtur incident was mentioned in them.
If they are not available from the office of the District Superintendent of Police, Warangal,, they may be called for from the office of the Inspector General of Police, C.I.D., and they may be held in the record.
" 503 On this application the court recorded the following order: "The way in which the accused Habeeb Mohamed remarked on the higher office that documents are either not received or that they are destroyed is not the proper way of remarking.
Investigation against officers cannot be conducted.
Besides this, in this file all other things are decided and the accused was given sufficient time.
Filing of an application on every hearing is not to be tolerated.
" The appellant 's counsel, produced before us a list of the documents which were asked for, some of which were brought into court and regarding some the report was that they were destroyed or were not available.
We cannot accede to the contention of the learned counsel that the court was called upon to make investigation into the question whether the replies from different officers as to what documents were destroyed or were not available were correct or not.
It was open to the counsel for the accused, whenever any such report came, to challenge the statement and at that stage the court might have been in a position to ask the prosecution to support their replies by affidavits or otherwise.
It, however, does appear somewhat curious that important documents which were required by the defence to establish the appellant 's version of the incident are stated to have been destroyed or not available.
Such bald assertions do not create much confidence in the mind of the court and it does not appear that there was any occasion during police action for the officer responsible for it to destroy records made by police officers and submitted to the Inspector General of Police or to the Home Secretary.
The appellant to a certain extent was justified in such circumstances to ask the court to raise the inference that if these documents were produced they would not have supported the prosecution story.
The learned Advocate General appearing for the State contended that assuming that the failure of the prosecution to examine Biabani has caused, serious 504 prejudice to the accused or that the denial of opportunity to him to examine certain witnesses in defence has also caused him serious prejudice, this court may direct the High Court to summon the witnesses and record their statement and transmit them to this court and that the appeal may be decided after that evidence has been taken.
In our opinion, this course would not be proper in the peculiar circumstances of the present case.
It is not possible without setting aside the conviction of the appellant to reopen the case and allow the prosecution to examine a material witness or witnesses that ought to have been produced and allow the defence also to lead defence evidence.
A conviction arrived at without affording opportunity to the defence to lead whatever relevant evidence it wanted to pro , duce cannot be sustained.
The only course open to us in this situation is to set aside the conviction.
The next question for consideration is whether in the result we should order a retrial of the appellant.
After a careful consideration of the matter we have reached the conclusion that this course will not be conducive to the ends of justice.
The appellant was in some kind of detention even before he was arrested.
Since January, 1949, up to this date he has either been in detention or undergoing rigorous imprisonment and sirce the last three years he has been a condemned prisoner.
The events regarding which evidence will have to be taken afresh took place on the 9th December, 1947, and after the lapse of six years it will be unfair and contrary to settled practice to order a fresh trial.
In our opinion, as in substance there has been no fair and proper trial in this case, we are constrained to allow this appeal, set aside the conviction of the appellant under the different sections of the Hyderabad Penal Code and direct that he be set at liberty forthwith .
It may well be pointed out that if there had been mere mistakes on the part of the court below of a technical character which had not occasioned any failure of justice or if the question was purely one of this court taking a different view of the evidence given in the case, there would have been no interference by us under the provisions of article 136 of the Constitution.
Such questions 505 are as a general rule treated as being for the final decision of the courts below.
In these circumstances it is unnecessary to examine the merits of the case on which both the learned counsel addressed us at some length.
, Before concluding, however, it maybe mentioned that Mr. McKenna apart from the points above mentioned raised a few other points of a technical character but on those points we did not call upon the learned Advocate General in reply.
It was contended that the court did not examine the accused under section 256, Criminal Procedure Code, after further crossexamination of the witnesses.
In our opinion, this omission was not material as nothing further appeared from the cross examination which the court could ask the accused to explain.
The accused had given a full statement on all the matters which required explanation in the case.
Then it was argued that under the Hyderabad law at least two witnesses are necessary in a murder trial for a conviction in such a case.
In this case more than two witnesses were produced who directly or indirectly implicated the appellant with the commission of the murder.
The section of the Code referred to does not lay down that there should be two eye witnesses of the occurrence before a conviction can be reached as regards the offence.
Further it was argued that the ' Special Judge had no jurisdiction because H. E. H. the Nizam had not given his assent to the law as contained in Ordinance X of 1359 F.
In our opinion, there is no substance in this contention because the Nizam under a fireman bad delegated all his powers of administration including power of legislation to the Military Governor and that being so, no further reference to the Nizam was necessary and the Military Governor was entitled to issue the Ordinance in question.
Lastly it was argued that the sanction for the prosecution of the appellant under the provisions of section 207 of the Hyderabad Code of Criminal Procedure (corresponding to section 197 of the Criminal Procedure Code) was given after the Judge had taken cognizance of the case.
We see no force in this point as well.
Before the trial started 506 the court was fully seized of the case and by then the sanction had been given.
Appeal allowed.
Conviction set aside.
| Though the prosecution is not bound to call all available witnesses irrespective of considerations of number or reliability, witnesses essential to the unfolding of the narrative on which the prosecution is based must be called by the prosecution, whether in the result the effect of their testimony is for or against the case for the prosecution.
Where the case against the accused, a Subedar, was that he gave orders to the police to fire and the Deputy Commissioner of Police who had accompanied the accused and had witnessed the occurrence was not examined by the prosecution: Held, that the failure to examine him not only led to an adverse inference against the prosecution case but also cast serious reflection on the fairness of the trial.
Adel Mohammad vs Attorney General of Palestine (A.I.R.1946 P.C. 42) distinguished.
Stephen Senivaratne vs The King (A.I.R. 1936 P.C. 289) relied on.
Ram Banjan Roy vs Emperor (I. referred to.
Police diaries of a case under inquiry or trial can be made use of by a criminal court only for aiding it in such inquiry or trial.
The court would be acting improperly if it uses them in its judgment or seeks confirmation of its opinion on the question of appreciation of evidence from statements contained in those diaries.
Though the Supreme Court would not interfere under article 136 of the Constitution if there were mere mistakes on the part of the court below of a technical character which had not occasioned any failure of justice or the question was purely one of the court taking a different view of the evidence given in the case, it would interfere if in substance there has not been Is fair and proper trial.
Where material eye witnesses were not examined, to disprove the prosecution case as to the motive of the accused, the court, without calling for the police diaries during the trial, stated in the 63 476 judgment that the statements made by the witnesses before the police were the same as those made by them in the court: Held, that there was in substance no fair and proper trial and the conviction should be set aside.
|
eal No. II of 1949.
Appeal by special leave from the judgment of the Allaha bad High Court (Harish Chandra J.) dated 11th November, 1949, in Criminal Miscellaneous Case No. 960 of 1949.
The facts of the case and the arguments of counsel are set out fully in the judgment.
Alladi Krishnaswami Iyer (Alladi Kuppuswami with him) for the appellant.
M.C. Setalvad, Attorney General for India (V. N. Sethi, with him) for the respondent.
May 5.
The judgment of Kania C.J. and Patanjali Sastri J. was delivered by PATANJALI SASTRI J. This is an appeal by special leave from an order of the High Court at Allahabad dismiss ing an application under sections 491 and 561 A of the Code of Criminal Procedure for release of the appellant who was arrested in pursuance of an extradition warrant issued by the Regional Commissioner of the United State of Rajasthan who is the principal officer representing the Crown in the territory of that State.
The appellant who is a member of the Uttar Pradesh Civil Service was appointed in 1948 to serve what was then known as the Tonk State in various capacities, and during such service he is alleged to have helped the Nawab in obtaining the sanction of the Government of India to the payment of Rs. 14 lakhs to the Nawab out of the State Treasury for the discharge of his debts, and to have induced the Nawab by threats and deception to pay the appellant, in return for such help, sums totalling Rs. 3 lakhs on various dates.
On these allegations the appellant is charged with having committed offences under section 383 (Extortion) and 575 section 420 (Cheating) of the Indian Penal Code which are extraditable offences under the (hereinafter referred to as "the Act").
The warrant was issued under section 7 of the Act to the District Magis trate, Nainital, where the appellant was residing after reverting to the service of the Uttar Pradesh Government, to arrest and deliver him up to the District Magistrate of Tonk.
The appellant 's case is that the sum of Rs. 3 lakhs was paid to him by the Nawab to be kept in safe deposit in a bank for the Nawab 's use in Delhi, that no offence was committed and that the amount was returned when demanded by the authorities of the Tonk State.
The warrant was issued mala fide on account of enmity.
Various technical objections were also raised to the validity of the warrant and to the jurisdiction of the Magistrate at Nainital to take cogni sance of the matter and arrest the appellant.
The High Court overruled all the objections and dismissed the application for the release of the appellant.
On behalf of the appellant Mr. Alladi Krishnaswami Aiyar contended that section 7 of the Act under which the warrant purports to have been issued had no application to the case and that the entire proceedings before the Magistrate were illegal and without jurisdiction and should be quashed.
Learned counsel, relying on section 18 of the Act which provides that nothing in Chapter III (which contains section 7) shall "derogate from the provisions of any treaty for the extradition of offenders," submitted that the treaty entered into between the British Government and the Tonk State on the 28th January, 1869, although declared by section 7 of the Indian Independence Act, 1947, to have lapsed as from the 15th August, 1947, was continued in force by the "Stand still Agreement" entered into on the 8th August, 1947, that that treaty exclusively governed all matters relating to extradition between the two States, and that, inasmuch as it did not cover the offences now charged against the appel lant, no extradition of the appellant could be demanded or ordered.
576 The Attorney General appearing for the Government ad vanced three lines of argument in answer to that contention.
In the first place, the standstill agreement entered into with the various Indian States were purely temporary ar rangements designed to maintain the status quo ante in respect of certain administrative matters of common concern pending the accession of those States to the Dominion of India, and they were superseded by the Instruments of Acces sion executed by the Rulers of those States.
Tonk having acceded to the Dominion on the 16th August, 1947, the stand still agreement relied on by the appellant must be taken to have lapsed as from that date.
Secondly, the treaty was no longer subsisting and its execution became impossible, as the Tonk State ceased to exist politically and such sover eignty as it possessed was extinguished, when it covenanted with certain other States, with the concurrence of the Indian Government "to unite and integrate their territories in one State, with a common executive, legislature and judiciary, by the name of the United State of Rajasthan," the last of such covenants, which superseded the earlier ones, having been entered into on the 30th March, 1949.
Lastly, even assuming that the treaty was still in operation as a binding executory contract, its provisions were in no way derogated from by the application of section 7 of the Act to the present case, and the extradition warrant issued under that section and the arrest made in pursuance thereof were legal and valid and could not be called in question under section 491 of the Criminal Procedure Code.
As we are clearly of opinion that the appellant 's contention must fail on this last ground, we consider it unnecessary to pronounce on the other points raised by the AttorneyGeneral especially as the issues involved are not purely legal but partake also of a political character, and we have not had the views of the Governments concerned on those points.
It was not disputed before us that the present case would fall within section 7 of the Act, all the requirements thereof being satisfied, if only the applicability of 577 the section was not excluded, under section 18, by reason of the Extradition Treaty of 1869, assuming that it still subsists.
The question accordingly arises whether extradi tion under section 7 for an offence which is not extradita ble under the treaty is, in any sense, a derogation from the provisions of the treaty, which provides for the extradition of offenders for certain specified offences therein called "heinous offences," committed in the respective territories of the high contracting parties.
Under article 1 the Gov ernment of the Tonk State undertakes to extradite any per son, whether a British or a foreign subject, who commits a heinous offence in British territory.
A reciprocal obliga tion is cast by article 2 on the British Government to extradite a subject of Tonk committing such an offence within the limits of that State.
Article 3 provides, inter alia, that any person other than a Tonk subject committing a heinous offence within the limits of the Tonk State and seeking asylum in British territory shall be apprehended and the case investigated by such Court as the British Govern ment may direct.
Article 4 prescribes the procedure to be adopted and the conditions to be fulfilled before extradi tion could be had, and article 5 enumerates the offences which are "to be deemed as coming within the category of heinous offences" which, however, do not include the of fences charged against the appellant.
The argument on behalf of appellant was put thus: The maxim expressio unius est exclusio alterius is applicable, as pointed out by McNair on The Law of Treaties, (1938 pp. 203, 204), to the interpretation of treaties.
According to that rule the treaty in question should be read as allowing extradition only for the specified offences and for no others, that is to say, as implying a prohibition of extra dition by either State for any other offence than those enumerated in article 5.
Further, while the treaty entitled each of the high contracting parties to demand extradition on a reciprocal basis, an unilateral undertaking by the Indian Government to grant extradition for an offence for which it could not claim extradition under the treaty 578 violates the principle of reciprocity which is the recog nised basis of all international compacts for extradition.
Such an arrangement places the State of Tonk in a more advantageous position which was not contemplated by the framers of the treaty.
And where, as here, the person whose surrender is demanded is an Indian subject who is not liable to be extradited under the treaty, his surrender under section 7 trenches upon the liberty of the subject.
In so far, therefore, as that section authorises extradition of a person, especially when he is an Indian subject, for an offence which is not extraditable under the treaty, it derogates from the provisions of the treaty within the meaning of section 18, and its application to the present case is thereby excluded.
The argument proceeds on a miscon ception and cannot be accepted.
No doubt the enumeration of "heinous offences" in arti cle 5 of the treaty is exhaustive in the sense that the high contracting parties are not entitled, under the treaty, to claim extradition of criminals in respect of other offences.
But we cannot agree that such of enumeration implies a prohibition against either those parties providing by its own municipal laws for the surrender of criminals for other offences not covered by the treaty.
It is difficult to imagine why the contracting States should place such a fetter on their respective legislatures in advance not only in regard to their subjects but also in regard to alien offenders, for, if such prohibition is at all to be implied, it should cover both.
As pointed out in Wheaton 's Interna tional Law, there is no universally recognised practice that there can be no extradition except under a treaty, for some countries grant extradition without a. treaty: (Fourth Edition, sections 116 (a) to (d), pp. 186 189).
No doubt the constitutional doctrine in England is that the Crown makes treaties with foreign States for extradition of criminals but those treaties can only be carried into effect by Act of Parliament: (Ibid section 116 (b), p. 187).
Accordingly, the extradition Acts are made applicable by an Order in Council in the case of each State which enters into an extradition treaty 579 with the Crown, and they are made applicable only so far as they can be applied consistently with the terms and condi tions contained in the treaty.
Under such a system where the high contracting parties expressly provide that their own subjects shall not be delivered up, as in the case of the treaty between England and Switzerland, the power to arrest and surrender does not exist: Regina vs Wilson(1).
This, it was observed by Cockburn C.J. in that case, was a "serious blot" on the British system of extradition, and the Royal Commission on Extradition, of which he was the chairman, recommended in their report that "reciprocity in this matter should no longer be insisted upon whether the criminal be a British subject or not.
If he has broken the laws of a foreign country his liability to be tried by them ought not to depend upon his nationality .
The convenience of trying crimes in the country where they were committed is obvious.
It is very much easier to transport the criminal to the place of his offence than to carry all the witnesses and proofs to some other country where the trial is to be held:" (Wheaton, section 120 (a), pp. 197, 198).
Evidently, similar considerations led to the passing of the Act by the Indian Legislature providing for the surrender of criminals, including Indian subjects, for a wide variety of offences, with power to the Governor General in Council to add to the list by notification in the Gazette generally for all States or specially for any one or more States.
This statutory authority to surrender cannot of course enlarge the obliga tion of the other party where an extradition treaty has been entered into, and this is made clear by section 18.
But it is equally clear that the Act does not derogate from any such treaty when it authorises the Indian Government to grant extradition for some additional offences, thereby enlarging, not curtailing, the power of the other party to claim surrender of criminals.
Nor does the Act derogate, in the true sense of the term, from the position of an Indian subject under the treaty of 1869.
That treaty created no right in the subjects of either (1) 580 State any more than in fugitive aliens not to be extradited for other than "heinous offences.
" It is noteworthy that even in Wilson 's case, (ubi supra) where there was an excep tion in the treaty in favour of the subjects of the con tracting States, the decision was based not on the ground that the treaty by itself conferred any right or privilege on English subjects not to be surrendered but on the ground that the Order in Council applying the Extradition Act, 1870, to Switzerland limited its operation, consistently with the terms of the treaty, to persons other than English subjects.
It is, therefore, not correct to say that, by providing for extradition for additional offences, the Act derogates from the rights of Indian citizens under the treaty or from the provisions of the treaty.
We are accord ingly of opinion that the arrest and surrender of the appel lant under section 7 of the Act is not rendered unlawful by anything contained in the treaty of 1869, assuming that it still subsists.
The appeal fails and is dismissed.
FAZL ALI J.
I have had the advantage of reading the judgments prepared by my brothers Sastri and Mukherjea, who have given different reasons for arriving at the same con clusion.
As I am inclined to agree with the line of reason ing in both the judgments, I concur in the order that this appeal should be dismissed.
MAHAJAN J.
I agree with the judgment going to be deliv ered by my brother Mukherjea.
For the reasons given therein this appeal should be dismissed.
MUKERJEA J.
This appeal, which has come up before us on special leave granted by this Court, is directed against a judgment of Harish Chandra J. of the Allahabad High Court dated 11th of November, 1949, by which the learned Judge dismissed an application of the appellant under sections 491 and 561 A of the Criminal Procedure Code.
The facts which are material for purposes of this appeal are not in controversy and may be shortly stated as follows: The appellant Dr. Ram Babu 581 Saksena, who is a resident of the United Provinces, was a member of the Executive Civil Service in that province, and during his official career, extending over SO years, held various important posts, both in and outside that province.
In January, 1948, he was appointed Administrator of the Tonk State, where a dispute was going on at that time regarding succession to the rulership of the State between two rival claimants.
On 11th of February, 1948, the dispute was set tled and Ismail Ali Khan was recognised as the Nawab or the Ruling Prince of the State and appellant was then appointed Dewan and Vice President of the State Council, of which the Nawab was the President.
In April, 1948, the Tonk State, together with several other States in Rajputana, integrated and formed together the United State of Rajasthan and the appellant thereupon became the Chief Executive Officer of the Rajasthan Government.
Towards the end of July, 1948, he got another special post under the Rajasthan Government, but soon afterwards, he took leave and proceeded to Naini Tal, where he has been residing since then.
On 23rd May, 1949, he was arrested at Naini Tal on the strength of a warrant issued under section 7 of the , by Shri V.K.B. Pillai, Regional Commissioner and Political Agent of the United State of Rajasthan.
The warrant, which is dated the 8th of May, 1949, was addressed to the District Magistrate of Naini Tal and directed the arrest of Dr. Saksena and his removal to Rajasthan, to be delivered to the District Magistrate of Tonk for enquiry into certain of fences against the laws of that State which he was alleged to have committed.
After his arrest, the appellant was released on bail in terms of the warrant itself and was directed to be present before the District Magistrate of Tonk on the 7th of June, 1949.
The allegations against the appellant in substance are, that while he was 'the Dewan of the Tonk State and Vice President of the State Council, the Nawab, being in urgent need of money to meet his personal demands, requested Dr. Saksena to help him in obtaining for his own use 582 a sum of Rs. 14 lakhs from the State Treasury.
Dr. Saksena promised his assistance on condition that the Nawab would give him a sum of Rs. 3 lakhs out of this amount as his share.
By dint of his efforts, the appellant succeeded in inducing the State Ministry to pay the full amount of Rs. 14 lakhs to the Nawab in different instalments.
The first instalment, amounting to over Rs. 21/2 lakhs was paid on 31st March, 1948, and a further sum of Rs. 5 lakhs was paid on 21st of April following.
On that date, it is said, the Nawab paid to Dr. Saksena a sum of Rs. 1,50,000 which was only half of the promised amount.
A few days later, Dr. Saksena pressed for payment of the balance and held out threats to the Nawab that in case the money was not paid, the latter would find himself in serious difficulties as his position as a Ruling Prince of the State was not at all secure and there were grave charges against him.
As a result of these threats and misrepresentations, the Nawab was induced to pay to the appellant the balance of Rs. 1,50,000 in two instalments.
The matter became known to the Regional Commissioner some time in November 1948 and he called Dr. Saksena for an interview and succeeded in getting back from him the entire sum of Rs. 3 lakhs which the Nawab had paid.
On the basis of these facts, Dr. Saksena has been accused of having committed offences under sections 383 and 420 of the Indian Penal Code.
On 3rd June, 1949, Dr. Saksena filed an application in the High Court of Allahabad under sections 491 and 561 A of the Criminal Procedure Code, complaining of illegal and unauthorised detention under the warrant of the Regional Commissioner of Rajputana dated the 8th of May, 1949.
The legality of the warrant and of arrest thereunder was at tacked on a number of grounds.
It was contended, first of all, that the applicant was falsely implicated by the Nawab on account of enmity which grew up between them for various reasons and the allegations made were totally false.
It was next said that the District Magistrate of Naini Tal could not take cognizance of the matter without the previous 583 sanction of the U.P. Government under section 197 of the Criminal Procedure Code and that the sanction of the Rajpra mukh of the United State of Rajasthan was also necessary before any proceeding could be initiated.
The third and the main contention was that the alleged offences being said to have been committed in the State of Tonk, the case would be governed by the provisions of the Extradition Treaty entered into between the British Government and the Tonk State on 28th of January, 1869, and as neither "extortion" nor "cheating" was mentioned in the list of offences for which extradition was permissible under that Treaty, the warrant of arrest issued under section 7 of the Extradition Act was wholly illegal and unauthorised.
It is admitted that these offences are specified in the Schedule to the Indian Extra dition Act of 1903, but it was said that section 18 of the Extradition Act expressly made the Act inapplicable when its provisions "derogated" from those of a Treaty.
Lastly, it was urged that the extradition warrant was a mala fide step taken by the Nawab of Tonk with the help of his friend the Regional Commissioner of Rajasthan for ulterior purposes and that it constituted a fraud upon the Statute and an abuse of the processes of law.
The application was heard by Harish Chandra, J. sitting singly, and by a judgment dated 11th of November, 1949, which fully and elaborately dis cussed the different points raised in the case, the learned Judge rejected the application of the petitioner.
No cer tificate was given by the High Court under section 205 (1) of the Government of India Act, 1935, and the present appeal has been brought to this Court on the strength of special leave granted by it.
Sir Alladi Krishnaswami Aiyar, who appeared in support of the appeal, has very properly not pressed before us all the points that were canvassed on behalf of his client in the Court below.
His contention, in substance, is that the rights of extradition in the present case should be regulat ed exclusively by the provisions of the Extradition Treaty that was entered into between the Tonk State and the British Government 584 on 28th of January,.
1869, and was subsequently modified by a supplementary ,Treaty in the year 1887.
This Treaty, it is argued, has not been abrogated or rendered ineffective in any way by reason of the merger of the Tonk State in the United State of Rajasthan, and the decision of the High Court on this point is erroneous.
According to the provi sions of this Treaty, no extradition is permissible in respect to offences of "extortion" and "cheating" with which the appellant is charged and the warrant of arrest issued by the Political Agent is consequently illegal and ultra vires.
It is conceded by Sir Alladi that if section 7 of the , is held to be applica ble to the facts of the present case, the warrant of arrest issued by the Political Agent of Rajasthan could not be assailed as invalid or inoperative; but his contention is that section 18 of the Extradition Act makes an express reservation in cases where Treaty rights exist and to the extent that the provisions of Chapter III of the Extradition Act derogate from those of any Treaty relating to extradi tion of offenders, the Treaty is entitled to prevail.
To appreciate the merits of this contention, it may be convenient to refer at this stage to a few sections of the of 1903 as well as to the material provisions of the Extradition Treaty between the Tonk State and the British Government which have a bearing upon the present question.
Chapter 111 of the deals with surrender of fugitive criminals in case of States other than foreign States and section 7, with which this chapter opens, provides as follows: "(1) Where an extradition offence has been committed or is supposed to have been committed by a person, not being a European British subject, in the territories of any State not being a foreign State, and such person escapes into or is in British India, and the Political Agent in or 1or such State issues a warrant, addressed to the District Magis trate of any district in which such person is believed to be, (or if such person is believed to be in any Presidency town 585 to the Chief Presidency Magistrate of such town), for his arrest and delivery at a place and to a person or authority indicated in the warrant such Magistrate shall act in pursu ance of such warrant and may give directions accordingly.
" * * * * The expression "extradition offence" has been defined in section 2 (b) and means "any such offence as is described in the First Schedule to the Act.
" The First Schedule gives a catalogue of offences described with reference to specific sections of the Indian Penal Code and it includes offences punishable under sections 383 and 420 of the Indian Penal Code prima facie, it seems therefore that all the conditions laid down in section 7 of the Extradition Act are fulfilled in the present case.
the warrant has been issued by the Political Agent of a State which is not a "foreign State" as defined by the Act and the offences with which the appellant is charged are "extradition offences" as specified in Sched ule i. Sir Alladi 's contention, as stated above, is that section 7, which is in Chapter III of the Extradition Act, is controlled by section 18 which lays down that "nothing in this chapter shall derogate from the provisions of any treaty for the extradition of offenders, and the procedure provided by any such treaty shall be followed in any case to which it applies, and the provisions of this Act shall be modified accordingly.
" Turning now to the Extradition Treaty between the Tonk State and the British Government, it will be seen that the First Article of the Treaty provides for extradition, where a British subject or a foreign subject commits a "heinous" offence in British territory and seeks shelter within the limits of the Tonk State.
The Second Article deals with an offender who is a subject of the Tonk State and having committed a "heinous" offence within the State seeks asylum in British territory; while the Third Article relates to a person other than a Tonk subject who commits a "heinous" offence within the limits of the Tonk State and seeks asylum in British territory.
The conditions 586 under which extradition could be had in all such cases and the procedure to be followed are laid down in article 4.
Article 5 then gives a list of offences which would be deemed as coming within the category of "heinous" offences.
It is not disputed that neither "cheating" nor "extortion" are mentioned in this list.
The whole controversy, there fore, centers round the point as to whether in view of the provisions of the Extradition Treaty mentioned above, extra dition could legally be made or demanded in respect of offences coming under sections 383 and 420 of the Indian Penal Code which are mentioned in the list of offences specified in Schedule I to the Extradition Act but do not find a place in article 5 of the Treaty.
Could it be said that the provisions of the Extradition Act, derogate in this respect from the Treaty between the Tonk State and the British Government and consequently, the terms of the Treaty would override the statute as indicated in section 18 of the Extradition Act ? The learned Attorney General, who appeared for the Government of India, put forward a two fold argument in reply to the contention of Sir Alladi.
He argued in the first place, that section 18 of the has no application to the present case inasmuch as the Extradition Treaty between the Tonk State and the British Government, upon which the appellant relies, does not subsist and cannot be enforced, at the present day.
The other contention is that even if the Treaty still subsists, there is nothing in its terms which prohibits extradition for offences other than those described as heinous offences in article 5.
It is argued that "to derogate" means "to detract" or "to take away" and the Schedule to the Extradi tion Act by mentioning certain offences, which do not occur in the list of "heinous offences" as given in the Treaty, cannot be said to have derogated from the terms of the Treaty.
Both these points were fully argued on both sides and it is clear that if on either of these points a decision is reached adverse to the appellant, the appeal is bound to fail.
587 So far as the first point is concerned, Mr. Setalvad has drawn our attention to various political changes that have come over the Tonk State since the conclusion of the Extra dition Treaty in 1869.
In 1869 Tonk was one of the Native States in India with a "separate" political existence of its own and the Treaty that was entered into in that year was meant to regulate exclusively the rights and obligations in matters of extradition of offenders as between the Tonk State on the one hand and the British Government on the other.
In 1887 there was a modification of the Treaty but it is not disputed that the modification made certain alter ations in the procedure which are not material for our present purpose.
The major political change with regard to all Indian States which vitally affected their existing Treaties with the British Government occurred on the 15th of August, 1947, when India became an Independent Dominion.
Section 7 of the Indian Independence Act provided inter alia that: "(1) As from the appointed day (b) The suzerainty of His Majesty over the Indian States lapses, and with it, all treaties and agreements in force at the date of the passing of this Act between His Majesty and the rulers of Indian States . .
As a result of this provision, the Extradition Treaty between Tonk and the British Government must be deemed to have lapsed with effect from the 15th of August, 1947.
If matters stood there, obviously there would be nothing left upon which section 18 of the could possibly operate.
There was, however, a Standstill Agreement entered into by the Indian Dominion with the Indian States, the first article of which runs as follows: "1.
(1) Until new agreements in this behalf are made, all agreements and administrative arrangements as to matters of common concern now existing between the Crown and any Indian State shall, in so far as may be appropriate, contin ue as between the Dominion of 588 India or, as the case may be, the part thereof, and the State.
(2) In particular, and without derogation from the generality of sub clause (1) of this clause the matters referred to above shall include the matters specified in the Schedule to this agreement.
" The Schedule does mention "extradition" as one of the matters to which the Standstill Agreement is applicable.
This was certainly intended to be a temporary arrangement and Mr. Setalvad argues that as there was no Treaty in the proper sense of the term but only a substitute for it in the shape of a temporary arrangement, section 18 of the Extradition Act which expressly mentions a Treaty cannot be applicable.
While conceding that prima facie there is force in the conten tion, I think that this would be taking a too narrow view of the matter and I should assume for the purposes of this case that under the Standstill Agreement the provisions of the Treaty of 1869 still continued to regulate matters of extradition of criminals as between the Tonk State on the one hand and the Indian Dominion on the other till any new agreement was arrived at between them.
Though the Standstill Agreement was to take effect after the establishment of the Indian Dominion, the In strument was actually signed on 8th of August, 1947.
On the 16th of August, 1947, Tonk acceded to the Dominion of India and one of the terms in the Instrument of Acces sion is that the "Ruler accepts the position that with regard to matters specified in the Schedule to the Instrument, the Dominion Legislature would be entitled to make laws for the State." "Extradition including the surrender of criminals and accused persons to parts of His Majesty 's Dominion outside India" is one of the matters specified in the Schedule.
Thus the State gave up and surrendered in favour of the Dominion Legislature its right, to legislate in respect to extradition after the date of accession.
Whether the existing Extradition Treaty was ipso facto abrogated by this Instrument of Accession is not so clear.
Obviously, the Indian Dominion 589 could pass any legislation it liked regarding matters of extradition between the Tonk State, and any other State, either Indian or Foreign.
No such law was, however, passed by the Indian Legislature except that very recently under an Adaptation Order the Extradition Act of 1903 has been made applicable to States under Group B in the Indian Constitution in which Rajasthan is included.
It is to be noted that the Extradition Act itself, which is made applicable to the United State of Rajasthan, contains an express provision in section 18 which safeguards exist ing treaty rights.
It is somewhat unusual that an Extradi tion Treaty would be subsisting even after the State had acceded to India but we have no materials before us upon which we could definitely hold that the Treaty has been expressly superseded or abrogated by the Indian Legislature.
The next important thing is that in April, 1948, there was a Covenant entered into by the Rulers of nine States including Tonk, by which it was agreed by and between the covenanting parties that the territories of these nine States should be integrated into one State by the name of the United State of Rajasthan.
This was done with the concurrence of the Dominion of India.
Later on, on 12th of May, 1949, Mewar also became a party to this Covenant and the United State of Rajasthan was reconstituted by the integration of the territories of all the ten States.
By the Covenant of Merger, the Covenanting States agreed to unite and integrate their territories in one State known as the United State of Rajasthan and to have a common executive, legislature and judiciary.
The Rulers of all the States became members of the Council of Rulers and the President was designated as the Raj Pramukh of the United State.
Article VI of the Covenant of Merger runs as follows: "(1) The Ruler of each Covenanting State shall, as soon as practicable and in any event not later than the first day of May, 1948, make over the administration of his State to the Raj Pramukh; and thereupon 590 (a) all rights, authority and jurisdiction belonging to the Ruler which appertain or are incidental to the Govern ment of the Covenanting State shall vest in the United State and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder; (b) all duties and obligations of the Ruler pertain ing or incidental to the Government of the Covenanting State shall devolve on the United State and shall be discharged by it; and (c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the United State.
" The question now is how far was the Extradition Treaty between the Tonk State and the British Government affected by reason of the merger of the State into the United State of Rajasthan.
When a State relinquishes its life as such through incorporation into or absorption by another State either voluntarily or as a result of conquest or annexation, the general opinion of International Jurists is that the treaties of the former are automatically termi nated.
The result is said to be produced by reason of com plete loss of personality consequent on extinction of State life(1).
The cases discussed in this connection are gener ally cases where independent States have ceased to be such through constrained or voluntary absorption by another with attendant extinction of the former 's treaties with other States.
Thus the forceable incorporation of Hanover into the Prussian Kingdom destroyed the previous treaties of Hanover.
The admission of Texas into the United States of America by joint resolution extinguished the Treaties of the Independent Republic of Texas(2).
The position is the same when Korea merged into Japan.
According to Oppenheim, whose opinion has been relied upon, by Sir Alladi, no succession of rights and duties ordinarily takes place in such cases, and as political and personal treaties presuppose the exist ence of a contracting State, (1) Vide Hyde on International Law, Vol.
III, p. 1529.
(2) Vide Hyde on International Law, Vol.
II1, p. 1531, 591 they are altogether extinguished.
It is a debatable point whether succession takes place in cases of treaties relating to commerce or extradition but here again the majority of writers are of opinion that they do not survive merger or annexation(1).
The remarks quoted above do not, however, seem quite appropriate to a case of the present description.
Here there was no absorption of one State by another which would put an end to the State life of the former and extinguish its personality.
What happened here was that several States voluntarily united together and integrated their territories so as to form a larger and composite State of which every one of the covenanting parties was a component part.
There was to be one common executive, legislature and judiciary and the Council of Rulers would consist of the Rulers of all the Covenanting States.
It may not be said, therefore, that the Covenanting States lost their personality altogether and it is to be noted that for purposes of succession of Ruler ship and for counting votes on the strength of population and other purposes the Covenant of Merger recognises a quasi separation between the territories of the different States.
But although such separation exists for some pur poses between one State territory and another, it is clear that the inhabitants of all the different States became, from the date of merger, the subjects of the United State of Rajasthan and they could not be described as subjects of any particular State.
There is no such thing as subject of the Tonk State existing at the present day and the Ruler of Tonk cannot independently and in his own right exercise any form of sovereignty or control over the Tonk territory.
The Government, which exercises sovereign powers, is only one, even though the different Rulers may have a voice in it.
It seems to us that in those altered circumstances the Extradi tion Treaty of 1869 has become entirely incapable of execution.
It is not possible for the Tonk State, which is one of the contracting parties to act in accordance with the terms of the treaty, for it has no longer any independent (1) Oppenheim on International Law, Vol.
I, p. 152, 592 authority or sovereign rights over the Tonk territory and can neither make nor demand extradition.
When as a result of amalgamation or merger, a State loses its full and inde pendent power of action over the subject matter of a treaty previously concluded, the treaty must necessarily lapse(1).
It cannot be said that the sovereignty of the Tonk State in this respect is now vested in the United State of Rajasthan.
The authority, so far as extradition was concerned, was already surrendered by the Tonk State in favour of the Dominion Government by the Instrument of Accession.
But even assuming that these treaty rights could devolve upon the United State of Rajasthan by reason of article 6 of the Covenant of Merger, the latter, it seems to me, could be totally incapable of giving effect to the terms of the treaty.
As has been said already, there could be no such thing as a subject of the Tonk State at the present moment and article 2 of the Treaty which provides for extra dition of Tonk subjects accused of having committed heinous offences within Tonk territory and seeking asylum elsewhere would be wholly infructuous.
The United State of Rajasthan could not possibly demand extradition on the basis of this article, and if reciprocity, which is the essence of an Extradition Agreement, is gone, the Treaty must be deemed to be void and inoperative.
The decision in Terlinden vs Ames (2) which was relied upon by Sir Alladi in course of his arguments, rather forti fies the view that I have taken.
The question there was whether an Extradition Treaty between Prussia and the United States of America, which was entered into in 1852, could be given effect to after the incorporation of Prussia into the German Empire.
The question was answered in the affirmative.
It was pointed out inter alia that the Constitution of the German Empire left sufficient independent power and sover eignty to the States composing the confederation to enable them to act upon these treaties and it was observed by Chief Justice Fuller, who delivered the opinion of the Court, that where sovereignty in respect (1) Vide Hyde on International Law, Vol.
p. 1535.
(2) ; 593 to the execution of treaties is not extinguished and the power to execute remains unimpaired, outstanding treaties cannot be regarded as void.
This is the real criterion and as obviously the power of the Tonk State to execute the treaty is altogether gone after the Covenant of Merger, the treaty cannot but be regarded as void.
The other case cited by Sir Alladi, viz., that of Lazard Brothers vs Midland Bank Ltd.(1) has absolutely no bearing on this point.
It laid down the well accepted proposition of International Law that a change in the form of government of a contracting State does not put an end to its treaties.
The treaty entered into by the Czarist Russia could be given effect to after the Revolution, once the new government was recognised as a person in International Law.
My conclusion, therefore, is that the Extradition Treaty between the Tonk State and the British Government in 1869 is not capable of being given effect to in the present day in view of the merger of the Tonk State in the United State of Rajasthan.
As no treaty rights exist, section 18 of the has no application and section 7 of the Act has been complied with, there is no ground upon which we can interfere.
In view of my decision on the first point, the second point does not require determination and I refrain from expressing any opinion upon it.
In the result, the appeal fails and is dismissed.
DAS J I substantially agree with the reasonings given in the judgment just delivered by my learned brother Mukher jea and concur in dismissing this application.
Appeal dismissed.
| In 1869 the British Government and the State of Tonk entered into a treaty which provided for the extradition of offenders in respect of certain offences specified therein called "heinous offences," which did not include the of fences of cheating and extortion.
In 1903 the Indian Extradition Act was passed which provided for extradition in respect of cheating and extortion also, but section 18 of the Act provided that nothing contained in the Act "shall derogate from the provisions of any treaty for the extradition of offenders.
" Under the Independence of India Act, 1947, the suzerainty of His Majesty over the Indian States lapsed and with it all treaties and agreements in force; but under a "standstill agreement," between the Indian Dominion and the States (including Tonk) all agreements between His Majesty and the States were continued, including agreements in respect of extradition.
Tonk acceded to the Dominion of India in 1947 and became a member State of the United State of Rajasthan.
The appellant was a member of the Uttar Pradesh Civil Service and his services were lent to the State of Tonk in 1948.
After he had reverted to the Uttar Pradesh he was charged with the offences of cheating and extortion alleged to have been committed while he was in Tonk and was arrested under an extradition warrant issued under section 7 of the Extradition Act, 1903.
He applied under es.
4=91 and 561 A of the Code of Criminal Procedure for his release, contending that in view of the provisions of section 18 of the Extradition Act and the Treaty of Extradition of 1869, his arrest was illegal: Held per KANIA O. J. and PATANJALI SASTRI J. (FAZL, ALI.
J. concurring), Even assuming that the Extradition Treaty of 1869 subsisted after the merger of the Tonk State, by providing for extradition for additional offences the Extradition Act of 1903 did not derogate from the provisions of the Treaty of 5869 or the rights of Indian citizens thereunder, and the arrest and surrender of the appellant under section 7 of the Act was not, therefore, rendered unlawful by anything contained in the said Treaty.
574 Per MUKHERJEA J. (FAZL ALI, MAHAJAN and DAS JJ.
concur ring).
The Extradition Treaty of 1869 was not capable of being given effect to in view of the merger of the Tonk State in the United State of Rajasthan, and, as no enforce able treaty right existed, section 18 of the Extradition Act of 1903 had no application; and inasmuch as the conditions of section 7 of the said Act had been complied with, the warrant of arrest issued under section 7 of the Act was not illegal.
|
ls Nos. 140 to 143 and 156 and 157 of 1953.
Appeals by special leave granted by the Supreme Court by its Order dated the 23rd April, 1953, from the decision dated the 19th December, 1952, of the Labour Appellate Tribunal of India, Third Bench, Madras, in Appeals Nos.
245/52, 246/52, 247/52 and 248/52.
466 C.K. Daphtary, Solicitor General for India, (I. B. Dadachanji, with him) for the appellants in all the appeals.
S.Mohan Kumaramangalam for the respondents in Civil Appeals Nos.
140 to 143.
H. J. Umrigar for the respondents in Civil Appeals Nos.
156 and 157.
October 8.
The Judgment of the Court was delivered by MAHAJAN J.
The Government of Mysore by a notification dated 15th June, 1951, under powers conferred by section 7 of the Industrial *Disputes Act, 1947, constituted an Industrial Tribunal for a period of one year consisting of a chairman and two members for the adjudication of industrial disputes in accordance with the provisions of the Act.
It appointed the following persons as chairman and members thereof: Chairman : Rajadharmaprasakta T. Singaravelu Mudaliar.
Members : Janab Mohamed Sheriff.
Sri section Rangaramiah.
Two disputes between the management and the workers of the Minerva Mills Ltd., Bangalore, and two other disputes between the management and workers of the Mysore Spinning and Manufacturing Co. Ltd., Bangalore, were referred to the said Industrial Tribunal under section 10 (1) )c) of the Act for adjudication.
Several other disputes were also referred for adjudication to the same tribunal.
Till the 15th June, 1952, when the period of one year expired, the tribunal had only disposed of 5 out of the 22 disputes referred to it.
In the four disputes with which we are concerned ,the tribunal had only framed issues and had not proceeded to record any evidence.
On 27th June, 1952, the Government by another notification constituted another tribunal for adjudication of these disputes and acting under section 10(1) (c) of the Act referred all the disputes left undisposed of by the first tribunal to the newly constituted 467 tribunal.
This notification was not very happily worded and has been the subject matter of a good deal of comment in the courts below and also before us.
It runs thus : "Whereas under Notification No. L.S. 1075 L.W. 68 51 2, dated 15th June, 1951 an Industrial Tribunal for the adjudication of industrial disputes in accordance with the provisions of the , was constituted for a period of one year, And whereas the said period of one year has expired creating a vacancy in the office of both the chairman and the two members, namely, Chairman: Sri B. R. Ramalingiah.
Members : Janab Mohamad Sheriff.
Sri section Rangaramiah.
Now therefore in exercise of the power conferred under sections 7 and 8 of the , H.H. the Maharaja of Mysore is hereby pleased to constitute an Industrial Tribunal for adjudication of industrial disputes in the Mysore State in accordance with the provisions of the Act and further to appoint the following persons as chairman and members thereof Chairman Sri B. R. Ramalingiah.
Members Janab Mohamad Sheriff.
Sri K. Shamaraja Iyengar.
Under section 10 (1) (c) of the , H. H. the Maharaja is pleased to direct that the tribunal now constituted under this notification shall hear and dispose of all the references made to the previous tribunal constituted under the notification of 15th June, 1951, and which have remained undisposed of on 15th June, 1952.
" When the second tribunal proceeded to hear the four disputes which are the subject matter of these appeals, the employers raised a number of preliminary objections regarding the jurisdiction of the tribunal to hear and dispose of the disputes, the principal contentions being, (1) that the time limit of one year fixed 468 for die life of the first tribunal was unauthorized illegal and therefore the first tribunal continued to exist in spite of the expiry of that period; (2) that the Government could not withdraw the disputes referred to the first tribunal,from it, so long as the members of the first tribunal were available for discharging their duties and.
that section 8 had no application to the facts of this case ; and (3) that the trial of these disputes by the newly constituted tribunal, even if,it had jurisdiction to entertain them, could not be started from the stage at which they were left by the first tribunal and should begin de novo.
The employees contested these propositions and contended that it was competent for the Government to constitute one or more Industrial Tribunals under section 7 and it was open to it to prescribe that these tribunals should function for a limited period; that the notification dated the 27th June, 1952, was valid both under sections 7 and 8 of the Act and the second tribunal was properly constituted and had jurisdiction over the disputes referred to it under section 10 (1) (c) of the Act and that there was no need for a de novo trial in law.
The second tribunal rejected the preliminary objections raised by the employers and came to the conclusion that the Government was competent to constitute the first tribunal for a limited period, that the second tribunal was properly constituted and that the references made were proper and could be proceeded with from the stage at which the first tribunal had left them.
Against this order the employers preferred appeals ' to the Labour Appellate Tribunal, Nos. 245 to 248 of 1952.
They also filed writ applications under article, 226 of the Constitution of India before the Court, C.P. Nos. 79 and 80 of 1952 53, for the issue of writs of prohibition prohibiting the second tribunal from proceeding with the adjudication of the four disputes, the subject matter of the appeals.
The points that arose for decision in the appeals as well as in the writ applications were substantially the same.
In these circumstances the High Court postponed hearing the 469 writ applications till the appeals had been heard by the Labour Appellate Tribunal.
The Labour Appellate Tribunal by its order dated 19th December, 1952, dismissed all the 'appeals and subsequently the High Court of Mysore by its order dated 25th March, 1953, also dismissed the writ applications.
It, however, granted the employers a certificate of leave to appeal to this court.
The employers filed applications for special leave to appeal against the order of the Labour Appellate Tribunal passed in the appeals before it, and this court granted special leave to appeal by an order dated 23rd April, 1953.
The result is that we have four appeals now before us against the order of the Labour Appellate Tribunal, C.A. Nos. 140 to 143 of 1953 and two appeals before us from the order of the High Court refusing the application of the employers under article 226 of Constitu tion, C.A. Nos. 156 and 157 of 1953.
As all these appeals raise a common question of law they can conveniently be disposed of by one judgment.
Mr. Daphtary, who appeared for the employers, contended that the four disputes between the ,employers and employees that were referred to the Industrial Tribunal constituted by the notification of 15th June, 1951, were still in law pending before that tribunal and it was that tribunal and that tribunal alone that could adjudicate on them and give its award on them and that the second tribunal constituted by the notification of 27th June, 1952, had no jurisdiction to entertain the references or to give any awards concerning them.
It was contended that under the there is no power in the Government for appointing a tribunal for a limited duration, and that its power is only to constitute a tribunal and to refer certain disputes to it.
It is said that in the provisions of the Act it is implicit that a tribunal once appointed can cease to function only after the references made to, it have been exhausted, i.e., after it has given its award.
It 6 83 S.C. India/59. 470 was further urged that there is no power in the Government once it has made a reference under section 10 of the Act to withdraw it from the tribunal and to hand it over to another tribunal.
It was suggested that the members of the first tribunal should be directed to hear those references and to give their award.
In our opinion, none of these contentions can be sustained on the provisions of the Act Section 7 of the Act provides as follows : "The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of this Act.
(2)A tribunal shall consist of such number of independent members as the appropriate Government may think fit to appoint, and where the tribunal consists of two or more members, one of them shall be appointed as the chairman thereof . . ".
Section 8 provides that if for any reason a vacancy occurs in the office of the chairman or any other member of a court or tribunal, the appropriate Government shall, in the case of a chairman, and may, in the case of any other member, appoint another independent person, in accordance with the ' provisions of section 6 or section 7, as the case may be, to fill the vacancy, and the proceedings may be continued before the court or the tribunal so reconstituted.
Section 7 does not restrict or limit the powers of the Government in any manner and does not provide that a tribunal cannot be constituted for a limited period or for deciding a limited number of disputes.
From the very nature and purpose for which Industrial Tribunals are constituted it is quite clear that such tribunals are not to be constituted permanently.
It is only when some industrial disputes arise that such tribunals are constituted and normally such tribunals function so long as the disputes referred to them are not disposed of.
But from this circumstance it cannot be inferred that it is not open to the Government to fix a time limit for the life of these tribunals in order 471 to see that they function expeditiously and do not prolong their own existence by acting in a dilatory manner.
Mr. Daphtary, however, contended that though the language of section 7 was wide enough to include within its phraseology a power in the Government to constitute tribunals for any period of time it thought fit, this wide construction of its language had been limited by the other provisions of the Act.
He made reference to the provisions of section 4 which deals with conciliation officers.
Sub section (2) of section 4 provides that a conciliation officer may be appointed for a specified area or for specified industries in a specified area or for one or more specified industries and either permanently or for a limited period.
It is obvious that the nature of duties of conciliation officers being of a different character, provision has been made that they may be either appointed permanently or for a limited period.
From these provisions it is difficult to infer the same or a different intention regarding Industrial Tribunals.
They may well be appointed ad hoc for a particular dispute.
It was for this reason that no restriction was placed on the powers of Government regarding the constitution of tribunals, and Government was given very wide discretion and it could appoint them for any limited time or for a particular case or cases as it thought fit and as the situation in a particular area or a particular case demanded.
Reference was then made to the provisions of sections 15 to 20 of the Act for the proposition that once a reference is made to a tribunal, the adjudication must be ,concluded by that tribunal and that tribunal alone must give the award, and that the life of the tribunal cannot be cut short between the date of the reference of the dispute for adjudication and the date of the award.
Section 15 provides that where an industrial dispute has been referred to a Tribunal for adjudication, it shall hold its proceedings expeditiously and shall, as soon as practicable, on the conclusion thereof, submit its award to the appropriate Government.
We are unable to see that any inference 472 can be raised from the provisions of the section supporting the contention of Mr. Daphtary.
This is a provision directing the tribunal to function expeditiously and give its award as soon as possible.
Section 20(3) is in these terms "Proceedings before a tribunal shall be deemed to have commenced on the date of the reference of dispute for adjudication and such proceedings shall be deemed to have concluded on the date on which the award becomes enforceable under section 17 A." This section lays down the date or the terminus a quo for the termination and commencement of the proceedings.
It is difficult to see that it in any way cuts the power of the Government to appoint a tribunal for a limited duration.
Reference was also made to the provisions of section 33 which relate to the conditions of service during the pendency of the proceedings in adjudication.
It is provided therein that there shall be no change in the conditions of service of the workmen pending adjudication.
In our opinion, the Labour Appellate Tribunal and the High Court were right in holding that from these provisions it could not be held that it was implicit in section 7 that the Government could not withdraw a dispute referred to a tribunal or make the appointment of a tribunal for a limited period of time.
In our opinion, under the provisions of section 7, the appropriate Government has ample power of constituting a tribunal for a limited time, intending thereby that its life would automatically come to an end on the expiry of that time.
The contention therefore of Mr. Daphtary that the notification appointing the first tribunal for a period I of one year was illegal and that the first tribunal continues to exist is without force.
His further contention that the Government could not withdraw the dispute referred to the first tribunal so long as the members of the first tribunal were available and could not hand it over to the 'second tribunal cannot also be sustained.
| Under Section 7 of the , the appropriate Government has ample power to constitute an industrial tribunal for a fixed period of time and to constitute a new tribunal on the expiry of that period, to hear and dispose of all references made to the previous.
tribunal which had not been disposed of by that tribunal.
|
Appeals Nos.
53 to 55 of 1951.
Appeals from the Judgment and Decree dated the 8th September, 1948, of the High Court of Judicature at Patna (Mahohar Lall and Mahabir Prasad JJ.) in C.A. Nos. 219 of 1946, and 40 and 39 of 1945, arising out of the Judgment ' and Decree dated the 29th January, 1946, and 16th September, 1944, of the Court of the Subordinate Judge, Motihari, in Original Suits Nos. 108, 109 and 110 of 1943.
C. K. Daphtary, Solicitor General for India (Rameshwar Nath, with him) for the appellant.
Ratan Lal Chowla (K. N. Aggarwal with him) for respondents Nos.
I and 2.
H. J. Umrigar for respondents Nos. 3 and 4. 1953.
October 5.
The Judgment of the Court was delivered by MUKHERJEA J.
Civil Appeal No. 53 of 1951.
This appeal is on behalf of the plaintiff and is directed against a judgment and decree of a Division Bench of the Patna High Court, dated the 8th of September, 1948, modifying those of the Additional Subordinate 179 Judge, Motihari, passed in Partition Suit No. 108/6 of 1943/46.
There were two money suits between the same parties which were tried along with the suit for partition and both of them were decreed by the trial judge, but dismissed by the High Court on appeal.
Civil Appeals Nos.
54 and 55 of this court arise out of these appeals and we will deal with them separately.
So far as the main appeal is concerned, the material facts are uncontroverted and the dispute centres round one short point, which relates to the extent of share in the disputed properties to which the plaintiff can be said to have acquired a legal title.
The plaintiff averred that he was entitled to a 4 annas share in the schedule lands and this claim was allowed by the trial judge.
The High Court held, on the other band, that the plaintiff 's title extended only to 1 anna 4 pies share in the disputed properties, and with regard to this share alone he could claim partition.
It is the propriety of this decision that has been challenged before us in this appeal.
To appreciate the contentions that have been raised by the parties before us, it may be convenient to narrate a few material facts.
The properties in suit, which are comprised in Tauzi No. 703 of the Champaran Collectorate, belonged admittedly to the defendants first party and their ancestors.
Defendant No. 1, Bhubneshwar Prasad, who is the main defendant in the present litigation, borrowed a sum of money from one Panchanan Banerjee on the basis of a promissory note some time before 1932.
Panchanan instituted a suit in the Court of the Subordinate Judge at Motihari against Bhubneshwar for recovery of this loan and having obtained a decree, put the decree in execution in Execution Case No. 16 of 1932 of the Court of the Subordinate Judge at Motihari.
In course of these proceedings, the right, title and interest of the judgment debtor in the properties in suit, which was described as amounting to 4 annas share in the same, was put up to sale and purchased by the decreeholder himself on 7th of September, 1932.
The purchaser got delivery of possession on January 25, 1935.
It is 180 admitted that at the time of the sale, Bhubneshwar along with his grand father Bishun Prakash, his father Lachmi Prasad and his two sons who are defendants 2 and 3 in the suit, constituted an undivided Hindu family, of which apparently his grand father was the karta; and it is not disputed that if a partition had taken place at that time, Bhubneshwar Prasad along with his sons would have got 4 annas share in the joint ancestral property.
Panchanan sold the interest purchased by him at the execution sale to the plaintiff by a conveyance dated the 1st of February, 1935, and it is on the strength of this conveyance that the plaintiff instituted the present suit claiming specific allotment of a 4 annas share in the suit properties.
Bhubneshwar and his three son&, to wit, defendants 2, 3 and 4, are the main defendants in the suit and it is not disputed that at the present moment they own the remaining 12 annas share in the suit properties.
The defendants 5, 6 and 7 were impleaded as parties defendants on the allegation that they held different portions of the joint properties as zarpeshgidars under the 12 annas proprietors.
The suit was contested primarily by defendant No. 1 and the substantial contention put forward by him was that as the money suit was instituted by Panchanan against him alone and his sons were not made parties either to the suit or the execution proceeding, his own undivided interest in the joint family properties and not that of his sons passed by the sale.
Consequently, the execution creditor could not by his purchase acquire more than 1 anna 4 pies share in the suit properties and to this share alone the plaintiff could legitimately lay a claim.
This contention was repelled by the Subordinate Judge who took the view that as the debt contracted by Bhubneshwar was not for immoral purposes, it was open to his creditor to realise his dues not merely from the father 's undivided coparcenary interest in the ancestral property but from the entire interest of the father and the sons in the same.
The execution proceedings showed that the creditor intended to attach and sell the interest of the sons as well and unless, 181 therefore, the sons succeeded in showing that the debts were such which they were not obliged to pay under the rules of Hindu law, the fact that they were not made parties to the proceedings was altogether immaterial.
The result was that the trial judge allowed the plaintiff 's claim in its entirety and passed a preliminary decree declaring the plaintiff 's one fourth share in the schedule properties.
The defendant No. 1 thereupon took an appeal to the High Court.
The learned Judges of the High Court, who heard the appeal, were of the opinion that the decision of the trial court would have been unassailable if the defendant No. I was the head of a joint family consisting of himself and his sons.
In such cases he could have represented the interests of his sons and the entire interest could have been sold in the execution sale.
But as in this case the plaintiff himself was a junior member of the family, he had neither any right of disposition over the interests of his sons, nor could he represent them in any suit or proceeding.
What the purchaser acquired by the execution sale was not any interest in a specified portion of the joint property, but the right of the judgment debtor to have his share defined and allotted by partition, and in this claim for general partition the question of the pious obligation of the sons to pay their father 's debts would not at all arise.
It was held, therefore, that the plaintiff was legally entitled to 1 anna 4 pies share in the joint properties which the father himself could claim on partition at the date of the sale.
The sole point for our consideration is, whether the view taken by the learned Judges is right ? For a proper determination of this point, it would be necessary to consider first of all whether the sons of defendant No. 1 were legally liable to pay the decretal debt due by their father and could this liability be enforced by attachment and sale of their undivided coparcenary interest in the joint family property along with that of their father ? If the liability did not exist, no other question would arise; but if it did exist, a question of procedure would still have to be considered as to whether the sons ' interest in the coparcenary 25 182 could be attached and sold without making the sons parties to the suit and the execution proceedings.
So far as the first point is concerned, the question whether the sons of defendant No. 1 were liable in law to discharge the decretal debt due by their father could be answered only with reference to the doctrine of Mitakshara law which imposes a duty upon the descendants of a person to pay the debts of their ancestor provided they are not tainted with immorality.
This doctrine, as is well known, has its origin in the conception of Smriti writers who regard non payment of debt as a positive sin, the evil consequences of which follow the undischarged debtor even in the after world.
It is for the purpose of rescuing the father from his torments in the next world that an obligation is imposed upon the sons to pay their father 's debts.
The doctrine, as formulated in the original texts, has indeed been modified in some respects by judicial decisions.
Under the law, as it now stands, the obligation of the sons is not a personal obligation existing irrespective of the receipt of any assets; it is a liability confined to the assets received by him in his share of the joint family property or to his interest in the same.
The obligation exists whether the sons are major or minor or whether the father is alive or dead.
If the debts have been contracted by the father and they are not immoral or irreligious, the interest of the sons in the coparcenary property can always be made liable for such debts.
We do not find any warrant for the view that to saddle the sons with this pious obligation to pay the debts of their father, it is necessary that the father should be the manager or karta of the joint family, or that the family must be composed of the father and his sons only and no other male member.
No such limitation is deducible either from the original texts or the principles which have been engrafted upon the doctrine by judicial decisions.
Where a debt is incurred for necessity or benefit of the family, the manager, whether he be the father or not, has the undoubted power to alienate any portion of the coparcenary property for the satisfaction of such debts, irrespective of the fact as to who actually contracted the debts.
The 183 authority of the manager is based upon the principle Of agency or implied authority which has been formulated in a text quoted by Mitakshara.
"Even a single individual," thus runs the text, "may make a donation, mortgage or sale of immovable property during a season of distress, for the sake of the family and especially for religious purposes"(1).
Such family debt, however, stands on quite a different footing from a personal debt contracted by the father which does not benefit the family.
The liability of his sons to pay such debt does not rest on the principle indicated above, according to which the junior members of a family are made to pay the family debts.
It is a special liability created on purely religious grounds and can be enforced only against the sons of the father and no other coparcener.
The liability, therefore, has its basis entirely on the relationship between the father and the son.
There is no authority to show that it is in any way dependent upon the constitution of the family either at the time when the debt was contracted or when the obligation is sought to be enforced.
On the other hand, the subject of debts has been dealt with by the author of Mitakshara quite separately and it has apparently no connection with the provisions made by the author relating to inheritance and constitution of the family.
The learned Judges of the High Court laid great stress on the fact that the defendant No. 1 in the present case was a junior member and not the karta of the family and consequently had no rights of disposal over his own interest or the interest of his sons in the joint property.
The idea seems to be that if the father was incompetent to alienate the coparcenary rights of his sons for satisfaction of his own debts, the creditor of the father could not claim to occupy a better position.
This way of approach does not seem to us to be correct.
It cannot be laid down as a pro position of law that the creditor 's power of proceeding against the son 's share in the joint estate for recovery of the debt due by the father is co extensive with the father 's power of disposal over such interest.
As has (1) Mitak.
L, 28, 184 been observed by this court in the case of Pannalal and Another vs Mst.
Naraini(1) "the father is power of alienating the family property for payment of his just debts may be one of the consequences of the pious obligation which the Hindu law imposed upon the sons; or it may be one of the means of enforcing it, but it is certainly not the measure of the entire obligation.
" If the creditor 's rights are deemed to be based exclusively upon the father 's power of disposition over the son 's interest, such rights must necessarily come to an end as soon as the father dies, or there is a partition between him and his sons.
It is settled law that even after partition the sons could be made liable for the pre partition debts of the father if there was no proper arrangement for the payment of such debts at the time when the partition was effected, although the father could have no longer any right of alienation in regard to the separated shares of the sons.
It is true that under the Mitakshara law, as it is administered in the State of Bihar, no coparcener can alienate, even for valuable consideration, his undivided interest in the joint property without the consent of his coparceners; but although a coparcener is incompetent to alienate voluntarily his undivided coparcenary interest, it is open to the creditor, who has obtained a decree against him personally, to attach and put up to sale his undivided interest, and after purchase to have the interest separated by a suit for partition.
A personal decree obtained against the sons could certainly be executed against them by attachment and sale of their undivided interest.
The position, in our opinion, cannot be different if they are under a legal liability to discharge the decretal debt due by their father; and this liability must be capable of being enforced in the same manner as a personal decree against them.
Whether this could be done only by making the sons parties to the sale or execution proceeding, is another matter to which we would advert presently; but so far as the legal liability of the sons is concerned, as the debts incurred by the father have not been shown to be immoral or irreligious, it must be hold that tinder (2) ; at 556, 185 the rule of Hindu law mentioned above, there is a legal liability on the part of the sons to discharge these debts and the creditor can enforce this liability by attachment and sale of the sons ' interest in the same manner as if it was a personal debt due by them.
The fact that the father was not the karta or manager of the joint family or that the family did consist of other coparceners besides the father and sons, does not affect the liability of the sons in any way.
This view has been taken in quite a number of cases(1) by the Allahabad as well as the Madras High Courts, and in our opinion it is quite a sound view to take.
Holding, as we do, that the sons were liable in this case to discharge the decretal debt due by their father, the further question arises as to how this liability could be enforced ? Could the interest of the sons in the joint property be attached and sold without making the sons parties to the suit and the execution proceedings? The point does not seem to us to present much difficulty.
Strictly speaking, the sons could not be said to be necessary parties to the money suit which was instituted by the creditor against the father on the basis of a promissory note.
If a decree was passed against the father and the sons jointly, the latter would have been personally liable for the debt and the decree could have been executed against their separate or personal property as well.
No doubt the sons could have been made parties to the suit in order that the question of their liability for the debts of their father might be decided in their presence.
Be that as it may, the money decree passed against the father certainly created a debt payable by him.
If the debt was not tainted with immorality, it was open to the creditor to realise the dues by attachment and sale of the sons ' coparcenary interest in the joint property on the principles discussed above.
As has been laid down by the Judicial Committee in a series of cases, of which the case of Nanomi Babuasin vs Modun Mohun(2) may (1) Vide Lalta Prashad v, Gazadhar, 55 All. 28; Chhotey Lal vs Ganpat 57 All.176; Vivayya vs Parthasarathi, (2) 13 I.A. 1.
Also see Bhagbut Pershad vs Mst.
Girja Kour, 15 I.A. 99.Minakshi Naidu vs Immudi, 16 I. A. 1 ; Mahabir Prashad vs Marktunda, 17 1, A. 11 ; Sripat v, Tagore, 44 I. A. 1.
186 be taken as a type, the creditor has an option in such cases.
He can, if he likes, proceed against the father 's interest alone but he can, if he so chooses, put up to sale the sons ' interest also and it is a question of fact, to be determined with reference to the circumstances of each individual case whether the smaller or the larger interest was actually sold in execution.
In the present case it has been found as a fact by the trial judge and this finding has not been reversed in appeal that the executing court intended to sell and did sell a four annas share in the joint property which included the undivided interest of the sons of defendant No. 1.
According to the view taken by the Privy Council in Nanomi Babuasin 's case(1), all that the son can claim in such cases is that not being made party to the sale or execution proceeding, he ought not to be barred from trying the nature of the debt or his liability to pay the same in any suit or proceeding started by him or to which he might be made a party.
He could raise the point either by way of objection in the execution proceeding itself or he could himself file a suit for a declaration that the debt was not binding on him.
He could also raise it by way of defence when the auction purchaser seeks to have his rights defined and demarcated in a partition suit.
In the case before us, the sons, who were made defendants to the partition suit, had that opportunity given to them.
Unfor tunately, however, they did not choose to avail themselves of this opportunity.
Defendant No. 2, the major son of defendant No. 1, did not file any written statement or contest the suit at all.
A written statement was indeed filed on behalf of the minor sons, defendants 3 and 4, who were represented by a pleader guardian and there this point was specifically raised.
But it appears from the records that they did not invite the court to frame any issue on the point, nor did they lead any evidence upon it.
They failed to show, therefore, that the debt was one which they were not obliged to pay under the rule of Hindu law.
It may be further noted that although the trial court 's decision was against the sons, they did not choose to challenge the decree by way of an appeal.
The appeal was filed only by their (1) 13 I.A. 187 father and they were made respondents; and it was only at a very late stage that the appellate court transferred them to the category of appellants.
The learned Judges of the High Court seem to be of the opinion that the principle enunciated by the Judicial Committee in Nanomi Babuasin 's case(1) or the other cases that followed it could apply only when the father was the head of the family and in that capacity could represent his sons in the suit or the execution proceeding.
But if the father was not the karta, this principle, it is said, would not apply and the purchaser could only acquire the right, title and interest of the father alone even though the court purported to sell the interest of the sons as well.
This does not seem to us to be a sound view to take.
It is true that in all the cases referred to above, the father was actually the head of the family but that does not make any difference in principle.
If the difference is sought to be made on the basis of the father 's capacity to represent the sons in any litigation, it may be said that, subject to the rights of the sons to assert and prove that the debt contracted by their father was not such as would be binding on them under the rule of Hindu law, the father even if he was not a karta, could represent the sons as effectively in the sale or execution proceedings as he could do if he was the karta himself.
Without being a karta he could, as a father, completely represent his branch of the coparceners consisting of himself and his sons; and vis a vis his sons his position would not improve in any way by his being a karta of the family.
It has been observed in a Madras case(1) and we think rightly that so long as the family remains joint, all the members of a branch or a sub branch of the family can form a distinct and separate corporate unit within the larger unit.
Of such a smaller unit consisting of the father and his sons, the father would undoubtedly be the head and legal representative, although he is not the head of the larger unit.
In our opinion, therefore, the High Court was not right in holding that the plaintiff could not claim 4 annas share in the property on (1) 13 I.A 1.
(2) Vide Sudarsaram vs Narasimhulu, I.L.R. 25 Mad.
149, 155, 188 the strength of the purchase by his predecessor in the execution sale simply because the father was not the manager or karta of the joint family at that time.
The result is that this appeal is allowed, the judgment and decree of the High Court are set aside and those of the trial judge restored.
The plaintiff will have costs of this court as well as of the court below.
Civil Appeals Nos. 54 and 55 of 1951.
Coming now to the money appeals, the point for consideration is a short one.
The suits out of which these appeals arise were instituted by the plaintiff in the partition suit against the first party defendants for recovery of his 4 annas share of the income or profits of the properties specified in the schedules to the plaints and which were included admittedly in his purchase, on the allegation that the defendants first party appropriated the entire profits to themselves and refused to give the plaintiff his legitimate share.
The High Court has held that this claim of the plaintiff must fail.
All that he purchased at the execution sale was the undivided interest of the coparceners in the joint property.
He did not acquire title to any defined share in the property and was not entitled to joint possession from the date of his purchase.
He could work out his rights only by a suit for partition and his right to possession would date from the period when a specific allotment was made in his favour.
In our opinion, this is the right view to take and Mr. Daphtary, who appeared in support of the appeals, could not satisfy us that in law his client was entitled to joint possession on and from the date of his purchase.
The result is that these appeals are dismissed with costs.
Appeal No. 53 allowed.
Appeals Nos. 54 and 55 dismissed.
| A person who has obtained a decree against a member of a joint Hindu family for a debt due to him is entitled to attach and sell the interest of his debtor in the joint family property, and, if the debt was not immoral or illegal, the interest of the judgment debtor 's sons also in the joint family property would pass to the purchaser by such sale even though the judgment debtor was not the karta of the family and the family did not consist of the father and the sons only when the decree was obtained against the father and the properties were sold.
It is not necessary that the sons should be made parties to the suit or the execution proceedings.
Lalta Prashad vs Gazadhar (I. L.R. 55 All. 28), Chhoteylal vs Ganpat (I.L.R. 57 All. 176) and Virayya vs Parthasarathi (I.L.R. approved.
178 The rule laid down by the Privy Council in Nanomi Babuasin 's Case is not restricted in its application to cases where the father was the head of the family and in that capacity could represent his sons in the suit or execution proceedings, for, subject to the right of the sons to assert and prove that the debt contracted by their father was not such as would be binding on them under the Hindu law, the father, even if he was not the karta could represent his sons as effectively in the sale or execution proceedings as be could do if he was the karta himself.
A person who has purchased the interest of a member of a joint Hindu family in execution of a decree against him is not entitled to institute a suit against the other coparceners for recovery of a share of the income of the joint family properties from the date of his purchase.
He can work out his rights only by a suit for partition and his right to possession would commence only from the period when a specific allotment is made in his favour.
|
ivil Appeal No. 161 of 1952.
Appeal from the Judgment and Order dated the 18th May, 1951, of the High Court of Judicature at Calcutta (Chakravartti and Das Gupta JJ.) in its Special Jurisdiction (Income tax) in Income tax Reference No. 63 of 1950.
N. C. Chatterjee (section N. Mukherjee, with him) for the appellant.
C. K. Daphtary, Solicitor General for India (O. N. Joshi, with him) for the respondent.
October 8.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal from the judgment and order of the High Court of Judicature at Calcutta on a reference made by the Income tax Appellate Tribunal under Section 66(1) of the Indian Incometax Act (XI of 1922).
197 The appellant is a banking company carrying on business at, among other places, Calcutta and Allahabad.
On the 15th March, 1946, the appellant executed a deed by which it purported to create a trust for the payment of pensions to the members of its staff.
The deed declared that a pension fund had been constituted and established.
It then recited that a sum of Rs. 2,00,000 had already been made over to three persons who were referred to as the "present trustees" and proceeded to state that the fund would consist in the first instance of the said sum of Rs. 2,00,000, and that there would be added to it such further contributions that the bank might make from time to time, though it would not be bound to make such contributions.
In the course of the accounting year 1946 47, the bank made a further payment of Rs. 2,00,000 to this fund.
In its assessment for the assessment year 1947 48 the appellant claimed deduction of that sum of Rs. 2,00,000 under section 10 (2) (xv) of the Act on the ground that it was an item of expenditure laid out or expended wholly and exclusively for the purposes of its business.
The Income tax Officer, the Appellate Assistant commissioner and the Income tax Appellate Tribunal rejected this claim of the appellant and the Income tax Appellate Tribunal at the instance of the appellant stated a case and referred for the consideration of the High Court the following question : "Whether in the facts and circumstances of this case, the Income tax Appellate Tribunal was right in disallowing Rs. 2,00,000 as a deduction under section 10 (2) (xv) of the Indian Income tax Act.
" The High Court answered the question in the affirmative and hence this appeal.
Though several contentions were sought to be raised by the appellant as well as the Income tax authorities before the High Court as arising from the question, the only contention which was canvassed before the High Court and was held to be determinative of the enquiry before it was whether the deed of trust dated 27 198 the 15th March, 1946, was valid.
On the construction of the several provisions of the deed of trust the High Court held : "I am of opinion that in view of these provisions of the trust deed coupled with the uncertainty as regards the beneficiaries and the absence of any obligation to grant any pension, no legal and effective trust was created, and the so called trust must be held to be void," It further held that even if the ownership of the money had passed over to the trustees, still the further provision regarding the application of the money to the payment of pensions being entirely ineffective and void, the money cannot be said to have been expended for the purpose of the business, and that therefore was not an expenditure or an expenditure for the purposes of the business within the meaning of section 10(2)(xv) of the Act.
This was also the only contention urged before us by Shri N. C. Chatterjee appearing on behalf of the appellant.
Section 3 of the Indian Trusts Act (II of 1882) defines a trust as an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.
The person for whose benefit the confidence is accepted is called the "beneficiary".
Section 5 in so far as it is material for the purpose of this appeal says that no trust in relation to movable property is valid unless declared as aforesaid (i.e., by a non testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the will of the author of the trust or of the trustee) or unless the ownership of the property is transferred to the trustee.
Section 6 of the Act provides that subject to the provisions of section 5, a trust is created when the author of the trust indicates with reasonable certainty by any words or acts. . . (c) the beneficiary. .
The validity or otherwise of the trust in question has got to be determined with reference to the above sections of the Indian Trusts Act, 199 The deed of trust provided in clause 5 that the income of the fund if sufficient and if the income of the fund shall not be sufficient then the capital of the fund shall be applied in paying or if insufficient in contributing towards the payment of such pensions and in such manner as the bank or such officers thereof as shall be duly authorised by the bank in that behalf shall direct to be paid out of the fund.
Clause 7 stated that the fund was established for the benefit of retiring employees on the European and Indian staff of the bank to whom pensions shall have been granted by the bank.
Clause 8 provided that any officer on the European staff of the bank who had been in the service of the bank for at least twenty five years and any officer or other employee on the Indian staff of the bank who had been in the service of the bank for at least thirty years might apply to the bank for a pension, and that in special circumstances the bank might grant pensions to employees who had not completed the respective periods of service above mentioned.
Clause 9 provided for the withdrawal, modification or determination by the bank of any pension payable thereunder when in its opinion the conduct of the recipient or the circumstances of the case justified it in so doing and the trustees were bound forthwith to act upon any directions of the bank or of any officers thereof duly authorised by the bank in that behalf.
Clause 11 invested the bank with discretion in fixing the amount of each pension and in making any modification therein but without prejudice to such discretion declared what were the pensions which it was contemplating would be payable to recipients qualified under the provisions of clause 8 of the deed.
Clause 18 authorised the bank from time to time by instrument in writing under its common seal with the assent in writing of the trustees to alter all or any of the regulations contained in the deed for the time being relating to the fund and make new regulations to the exclusion of or in addition to all or any of the regulations for the time being relating to the fund and for the purposes of that clause all the provisions contained in the deed were deemed to be the regulations in relation to the fund. ' 200 On a consideration of the provisions of the deed of trust above set out it is clear that the bank or its officers duly authorised in that behalf were constituted the sole authorities to determine what pensions and in what manner the same should be paid out of the income of the fund.
The fund was declared to have been established for the benefit of the retiring employees to whom pensions shall have been granted by the bank.
Officers of the staff who were qualified under clause 8 were declared entitled to apply to the bank for a pension.
But there was nothing in the terms of the deed which imposed any obligation on the bank or its officers duly authorised in that behalf to grant any pension to any such applicant.
The pension if granted could also be withdrawn, modified or determined under the directions of the bank or any officer of the bank duly authorised in that behalf and such directions were binding on the trustees.
The regulations in relation to the fund could also be altered and new regulations could be made to the exclusion of or in addition to all or any of the regulations contained in the deed of trust.
It was open under the above provisions for the bank or its officers duly authorised in that behalf to grant no pension at all to any officer of the staff who made an application to them for a pension and also to withdraw, modify or determine any pension payable to such officer if in their opinion the conduct of the recipient or the circumstances of the case should justify them in so doing.
The whole scheme of the deed invested the bank or its officers duly authorised in that behalf with the sole discretion of granting or of withdrawing, modifying or determining the pension and it was not at all obligatory on them at any time to grant any pension or to continue the same for any period whatever.
The beneficiaries therefore could not be said to have been indicated with reasonable certainty.
What is more it could also be validly urged that there being no obligation imposed upon the trustees no trust in fact was created, even though the moneys had been trans ferred to the trustees.
Shri N. C. Chatterjee however urged that the power conferred upon the bank or its officers duly authorised 201 in that behalf was a power in the nature of a trust, that there was a general intention in favour of a class and a particular intention in favour of individuals of a class to be selected by them and even though the particular intention failed from the selection not being made the court could carry into effect the general intention in favour of the class and that therefore the trust was valid.
He relied in support of this contention on Brown vs Higgs(1) and Burrough vs Philcox(2).
The position in law as it emerges from these authorities is thus summarised by Lewin on Trusts, Fifteenth fxEdition, page 324 : "Powers, in the sense in which the term is commonly used, may be distributed into mere powers, and powers in the nature of a trust.
The former are powers in the proper sense of the word that is not imperative, but purely discretionary; powers which the trustee cannot be compelled to execute, and which, on failure of the trustee, cannot be executed vicariously by the court.
The latter, on the other hand, are not discretionary, but imperative, have all the nature and substance of a trust, and ought rather, as Lord Hardwicke observed, to be designated by the name of trusts. 'It is perfectly clear, ' said Lord Eldon, 'that where there is a mere power, and that power is not executed, the court cannot execute it.
It is equally clear, that wherever a trust is created, and the execution of the trust fails by the death of the trustee or by accident, this court will execute the trust.
But there are not only a mere trust and a mere power, but there is also known to this court a power which the party to whom it is given is intrusted with and required to execute; and with regard to that species of power, the court considers it as partaking so much of the nature and qualities of a trust, that if the person who has the duty imposed upon him does not discharge it, the court will, to a certain extent, discharge the duty in his room and place '.
Thus, if there is a power to appoint among certain objects but no gift to those objects and no gift over in default of appointment, the court implies a trust for or gift to (1) 8 ves.
Junior 561 ; (2) 5 Mylne & Graig 72; 41 E.R. 299.
202 those objects equally if the power be not exercised.
But for the principle to operate there must be a clear indication that the settlor intended the power to be regarded in the nature of a trust.
" This position however does not avail the appellant.
As already stated there is no clear indication in the deed of trust that the bank intended the power to be regarded in the nature of a trust, inasmuch as there was no obligation imposed on the bank or its officers duly authorised in that behalf to grant any pension to any applicant.
There was no duty to grant any pension at all and the pension, if granted, could be withdrawn, modified or determined by the bank or its officers duly authorised in that behalf as therein mentioned.
Under the circumstances it could not be said that there was a power in the nature of a trust which could be exercised by the court if the donee of the power for some reason or other did not exercise the same.
It will be appropriate at this stage to consider whether any beneficiary claiming to be entitled to a pension under the terms of the deed could approach the court for the enforcement of any provision purporting to have been made for his benefit Even though he may be qualified under clause 8 to apply for the grant of a pension he could not certainly enforce that provision because there was no obligation imposed at all on the bank or its officers duly authorised in that behalf to grant any pension to him and in the absence of any such obligation imposed upon anybody it would be futile to urge that a valid trust was created in the manner contended on behalf of the appellant.
In our opinion therefore the High Court was right in the conclusion to which it came that there was uncertainty as regards the beneficiaries and there was an absence of any obligation to grant any pension with the result that no legal and effective trust could be said to have been created and further that the provision of Rs. 2,00,000 in the accounting year 1946 47 was not an expenditure or an expenditure for the purposes of the business within the meaning of section 10 (2) (xv) of the Indian Income tax Act.
203 In view of the above we do not think it necessary to into the interesting questions which were sought to toe raised by the appellant, viz., what was the scope of the reference, and by the respondent, viz., whether the expenditure was a capital expenditure or revenue expenditure and if the latter whether the deduction could still not be allowed in view of the provisions of section 10 (4) (c) of the Act.
The result therefore is that the appeal fails and must be dismissed with costs.
Appeal dismissed.
| A banking company executed a deed whereby it purported to create a trust for the payment of pensions to the retiring members of its staff.
A certain sum of money was made over to three persons who were called trustees and the deed provided that the company may make further contributions to the fund.
Under the terms of the deed, however, the company was not bound to pay any pension to any of the members of the staff, the payment itself and the amount payable being entirely at the discretion of the company, and the company had also the power to withdraw or modify any pension and to alter the rules relating to the granting of the pension at its will.
In the accounting year the company paid a further contribution of Rs. 2 lacs to the fund and claimed deduction of this amount under section 10 (2) (xv) of the Income tax Act as expenditure laid out wholly and exclusively for the purposes of the business: Held, that, as the deed did not impose any obligation on the bank or the trustees to grant any pension to any employee, and the pension, even if granted, could be withdrawn and even the rules could be completely altered at will by the company, no valid trust was created even though moneys had been transferred to the trustees, and the sum in question could not be said to have been spent for the purposes of the business and allowed as a deduction under section 10 (2) (xv).
Brown vs Higgs and Burrough vs Philcox (41 E.R. 299) distinguished.
|
Appeal No. 78 of 1952.
Appeal from the Judgment and Order dated the 17th January, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) in its Special Jurisdiction (Income tax) in Income tax Reference No. 50 of 1950.
C.K. Daphtary, Solicitor General for India (G. N. Joshi, with him) for the appellant, 26 190 N. C. Chatterjee (section C. Majumdar, with him) for the respondent.
October 8.
The Judgment of the Court was delivered by DAS J.
This is an appeal from the judgment and order of a Bench of the Calcutta High Court delivered on a reference made by the Income tax Appellate Tribunal under section 21 of the Excess Profits Tax Act, 1940, read with section 66(1) of the Indian Income tax Act, whereby the High Court answered in the affirmative the question of law referred to it.
The question referred was: "Whether in the facts and circumstances of these cases, the Income tax Appellate Tribunal was right in holding that the directors of the respondent company had a controlling interest in it as contemplated by section 2 (21) of the Excess Profits Tax Act." The controversy arose between the parties during proceedings for assessment of excess profits tax for five chargeable accounting periods ending on the 31st December of each of the years 1939 to 1943.
The relevant facts which are not in dispute are these: The respondent company is a company incorporated in what was then British India having a capital of Rs. 3,600,000 divided into 360,000 shares of Rs. 10 each.
The Aluminium Limited, a company incorporated in Canada, held 359,790 shares in the chargeable accounting periods ending on December31, 1939, and December 31, 1940, and 359,600 shares in the chargeable accounting periods ending on December 31, 1941, December 31, 1942, and December 31, 1943.
In exercise of the power given to it by article 105 of the articles of association of the respondent company, the Aluminium Ltd. appointed three permanent directors on the board of directors of the respondent company.
Two of these directors eventually retired and only one, namely, Mr. L. G. Bash continued to be a director of the respondent company nominated by the Aluminium Ltd. Mr. L. G. Bash and the other directors had between them during the chargeable 191 accounting periods ending on December 31, 1939, and December 31, 1940, only 210 shares and in the chargeable accounting periods ending on December 31, 1941, December 31, 1942, and December 31, 1943, 400 shares, Mr. L. G. Bash not having a single share during these last mentioned chargeable accounting periods.
By a resolution passed by the directors of the Aluminium Ltd., Mr. L. G. Bash was appointed to vote and/or from time to time to appoint a special or general proxy to vote for and on behalf of the Aluminium Ltd. in respect of the shares held by it in the respondent company at all ordinary or extraordinary general meetings of the shareholders of the respondent company.
Article 90 of the articles of association of the respondent company provides: "90.
Where a company registered under the provisions of the Indian Companies Act or not is a member of this company a person duly appointed to represent such company at a meeting of this company in accordance with the provisions of section 80 of the Indian Companies Act, 1913, shall not be deemed to be a proxy but shall be entitled to vote for such company on a show of hands and to exercise the same power on behalf of the company which he represents as if he were an individual member of this company including the power to appoint a proxy whether special or general and the production at the meeting of a company of such resolution appointing such representative duly signed by one director of such company and by the secretary (if any) and certified by them or him as being a true copy of the resolution shall on production at the meeting be accepted by this company as sufficient evidence of the validity of his appointment." Mr. L. G. Bash has at all material times been exercising the powers conferred by the above article as the representative of the Aluminium Ltd. The claim of the respondent company was that it should be regarded as a company the directors whereof had a controlling interest therein, inasmuch as Mr. L. G. Bash, one of the directors, had the I authority to exercise the voting power of the Aluminium Ltd. and, 192 as such, could control the affairs of the respondent company and that in computing the standard profits the statutory percentage should be taken at 10 per cent.
per annum and not at 8 per cent per annum.
This contention was rejected by the Excess Profits Tax Officer.
On appeal by the respondent company the Appellate Assistant Commissioner of Excess Profits Tax upheld the decision of the Excess Profits Tax Officer.
The respondent company thereupon appealed to the Incometax Appellate Tribunal "which reversed the decision of the Appellate Assistant Commissioner observing that in view of the power of attorney that was given to Mr. L. G. Bash by the Aluminium Ltd. there was no room for doubt that the respondent company, which was then the appellant before the Tribunal, was a director controlled company.
On the application of the Commissioner of Income tax, the Appellate Tribunal referred the question of law herein before set out.
By its judgment dated the 11th January, 1951, the High Court of Calcutta has answered the question in the affirmative.
The Commissioner of Excess Profits Tax, West Bengal, has now come up on appeal to this court with a certificate under section 66 A (2) of the Indian Income tax Act.
In common parlance a person is said to have "a controlling interest" in a company when such a person acquires, by purchase or otherwise, the majority of the vote carrying shares in that company, for the control of the company resides in the voting powers of its shareholders.
In this sense, the directors of a company may well be regarded as having "a controlling interest" in the company when they hold and are entered in the share register as holders of the majority of the shares which, under the articles of association of the company, carry the right to vote.
[See Glasgow Expanded Metal Co., Ltd. vs Commissioners of Inland Revenue (1) and Commissioners of Inland Revenue vs B. W. Noble(2)].
It is not, however, necessary that in order to have "a Controlling interest" the person or persons who hold the majority of the votecarrying shares must have a beneficial interest in the (1) (2) 193 shares held by them.
These persons may hold the shares as trustees and may even be accountable to their beneficiaries and may be brought to book for exercising their votes in breach of trust, nevertheless, as between them as shareholders and the company, they are the shareholders, and as such, have "a controlling interest" in the company.
[See Inland Revenue Commissioners vs J. Bibby & Sons Ltd.(1) and Commissioner of Income tax vs Bipin Silk Mills Ltd. (2)].
According to the facts found in the statement of the case the directors of the respondent company do not themselves hold the majority of shares which, on the contrary, are registered in the name of the Aluminium Ltd. and, therefore, according to the principles discussed above, they cannot be said to have "a controlling interest" in the respondent company.
Learned counsel for the respondent company, however, contends, on the analogy of the reasonings adopted by the House of Lords in British American Tobacco Co. Ltd. vs Commissioners of Inland Revenue(3) that although Mr. L. G. Bash does not hold the majority of shares and has no beneficial interest in the shares held by the Aluminium Ltd. in the respondent company and although he may be bound to cast the votes according to the directions of his principals, the Aluminium Ltd., and may be answerable to the latter if he acts in breach of his duty, nevertheless, as long as his authority is not revoked, as far as the respondent company is concerned, tile, majority of its vote carrying shares are subject, directly or indirectly, to his will and ordering and, therefore, the directors of the respondent company in fact control its affairs at general meetings and as such have " a controlling interest " therein, no matter by what machinery or means that result has been effected.
This line of argument found favour with the Appellate Tribunal and the High Court.
We are unable, with all respect, to accept this argument as sound, for this argument appears to us to oversimplify the position.
Assuming, but without, expressing any final opinion as (1) [1946] 14 I.T.R. (Suppl.) 7; [1945] I All E.R. 667; , (2) ; (3) ; 11 I.T.R. (Suppl.) 29; , 194 to, the correctness of the decision in the last mentioned case, we have no doubt that the analogy is inapt, for the principle of that decision can have no application to the case before us.
In the case of directors, who hold the majority of shares as trustees they, so far as the company is concerned, are the registered shareholders and the right to vote is vested in them, although as between them and their beneficiaries the beneficial interest is vested in the latter.
They are the registered holders of the shares and the votes they cast are their own votes.
That case is entirely different from the case of directors who are only the agents of the holders of the majority of shares.
When a shareholder holding the majority of shares authorises an agent to vote for him in respect of the shares so held by him, the agent acquires no interest, legal or beneficial, in the shares.
The title in the shares remains vested in the shareholder.
The shareholder may revoke the authority of the agent at any time.
In spite of the appointment of the agent the shareholder may himself appear at the meeting and cast his votes personally.
Therefore, the shares being always subject to his will and ordering, the controlling interest which the holder of the majority of shares has never passes to the agent.
Let us take the facts of the present case.
Under article 90, when Mr. L.G. Bash as agent of the Aluminium Ltd. attends a general meeting of the respondent company he has to produce the resolution of his principals authorising him to cast the votes of his principals.
The votes he casts are not his votes but are the votes of the Aluminium Ltd. In such a situation, in the eye of the law, the controlling interest remains vested in the Aluminium Ltd. and is at no time vested in Mr. L. G. Bash.
The shares in question which give the controlling interest are neither held by Mr. L. G. Bash nor are they subject, directly or indirectly, to his will and ordering, and, therefore, he cannot, applying either of the tests mentioned above, be said to have a controlling interest.
The decision of the Court of Appeal in Commissioners of Inland Revenue vs Jamed Hodgkinson (Salford) Ltd.(1) (1) 195 appears to us to be apposite.
It is unfortunate that the last mentioned case was not brought to the notice of the High Court before the judgment under appeal was delivered.
Dissent has been expressed in the judgment under appeal from the recent decision of the Bombay High Court in New Shorrock Spinning and Manufacturing Co. Ltd. vs Commissioner of Income tax, Bombay(1).
The facts of that case are entirely different from the facts of the case before us and that decision has no manner of application to the present case.
It is, therefore, unnecessary for us to discuss or express any opinion as to whether the observations to be found in the judgment in that case are or are not well founded.
For reasons stated above, we accept this appeal and hold that the answer to the question referred by the Appellate Tribunal to the High Court should be in the negative.
The respondent company must pay the costs of the appellant in this court as well as in the High Court.
Appeal allowed.
| Ordinarily a company will be a, "company, the directors whereof have a controlling interest therein" for the purposes of the Excess Profits Tax Act, 1940, only if the directors thereof hold, and are entered in the share register as holders of, a majority of the vote carrying shares of the company.
It is not necessary that they must have a beneficial interest in such shares, but the mere fact that one of the directors of the company has been authorised by another company which held a majority of shares in the former company, to vote on its behalf in respect of the shares held by it, will not make the former company a director controlled company.
Glasgow Expanded Metal Co. Ltd. vs Commissioners of Inland Revenue , Commissioners of Inland Revenue vs B. W. Noble , Inland Revenue commissioners V. ,T. Bibby and Sons Ltd. (14 I.T.R. Suppl 7, , Commissioner of Income tax vs Bipin, Silk Mills Ltd. and Commissioners of Inland Revenue vs Hodgkinson (Salford) Ltd. relied on.
British American Tobacco Co. Ltd. vs Commissioners of Inland Revenue ([1943] A.C. 335) and New Shorrock Spinning and Manufacturing Co. Ltd. vs Commissioner of Incometax, Bombay distinguished.
|
Appeals Nos. 131, 131 A and 131 B of 1952.
Appeals from the Judgment and Decree dated the 2nd day of February, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Vishwanath Sastri JJ.) in Cases Referred Nos. 76 and 78 of 1946 and 32 and 56 of 1947.
259 C.K. Daphtary, Solicitor General for India (G. N. Joshi, with him) for the appellant.
B. Somayya (Alladi Kuppuswami, with him) for the respondent.
October 14.
The Judgment of the Court was delivered by GHULAM HASAN J.
These three appeals arise from the judgment and order of the Madras High Court dated 2nd February, 1950, delivered on a reference by the Income tax Appellate Tribunal (hereinafter referred to as 'The Tribunal '), whereby the High Court answered the first referred question in, the negative, and as regards the second question, Satyanarayana Rao J. answered it in the affirmative, while Viswanatha Sastri J. answered it in the negative, as a result of which the judgment of Satyanarayana Rao J. ultimately prevailed.
They relate to the assessment for 1942 1943 and are filed by the Commissioner of Income tax, while Appeal No. 132 of 1952 which relates to 1943 1944 is filed by the assessee, and, is dealt with separately.
The two question which were referred in respect of the first group of appeals are as follows: (1) Whether there is any material for the Tribunal 's finding that the appellants (respondents in this case) were being assessed on cash basis in the prior years? (2) Whether on the facts and in the circumstances of the case the Appellate Tribunal 's finding that the sum of Rs. 2,26,850 could not be assessed for the assessment year 1942 43 is correct in law? The assessee is a registered firm (hereinafter referred to as 'the firm ') consisting of K.R.M.T.T. Thiagaraja Chetty and his two sons.
The firm is the managing agent of Shri Meenakshi Mills, Ltd., (hereinafter referred to as the Com pany) owning a, spinning mill at Madura.
The firm also con ducted insurance business and the business of ginning cotton in a ginning factory at another place.
Under the terms of L/B(D)2SCI 3(a) 260 the agreement the managing agents were entitled to a remu neration of Rs. 1,000 per mensem and a commission of I per cent.
on all purchases, I per cent.
on all sales and 10 per cent.
commission on the net profits of the mills before allowing for ,depreciation.
The firm had plenary powers of management of the affairs of the company subject to general supervision of the directors.
It was to have charge and custody on behalf of the company of all the property, books of accounts, papers and documents and effects belonging to the company.
It was required to keep at the expense of the company proper and complete books of account of all purchases and sales and of all payments made and moneys received on behalf of the company.
It had to defray all the expenses of maintaining a suitable office and a staff of assistants and clerks sufficient to transact the business of the firm as managing agents of the company.
Clause 16 is most important and lays down that the firm be at liberty to retain, reimburse, and pay themselves out of the funds of the company, all charges and expenses, legal or otherwise and all the costs and expenses of providing and maintaining offices for the company and the salaries of clerks, servants, agents or workmen and all moneys expended by them on behalf of the company and all sums due to the firm for commission or otherwise.
The company made considerable profit in the assessment year 1942 1943 and the firm became entitled to commission to the tune of Rs. 2,26,850 5 0.
The firm did not show this sum in the return on the ground that it was not actually re ceived in the year of account, viz., by the 31st March, 1942.
It relied upon a resolution of the Board of Directors of the company, dated the 30th March, 1942, by which they had decided to keep the aforesaid amount in suspense without paying it on the ground that an amount of two lakhs odd was due to the company from the firm.
It appears that the firm owed a debt to the company for a long time past which was outstanding.
The firm wrote on the 30th March, 1942, to the company requesting that the debt be written off.
The Firm also wrote that on account of the extraordinary increase in the 261 volume of business.
it found it difficult to bestow adequate attention on all the aspects of the mill business and proposed that the direct responsibility for sales and purchases may be transferred to some other agency, leaving the general supervision over the entire management in the firm 's hands.
The firm agreed to forego its commission on purchases and sales and agreed to take half of the commission on the net profits.
The directors by their resolution, passed on the same date, refused to write off the amount without consulting the general body of shareholders and pending the settlement of the dispute resolved, to keep the amount in suspense.
The Income tax Officer held that the firm followed the mercantile method of accounting and not the cash basis and that the income having accrued become assessable whether received or not.
The actual amount payable to the firm in, accordance with the terms and conditions of the agreement for the year 1942 1943 was not disputed.
The Appellate Assistant Commissioner confirmed the assessment and dismissed the appeal of the assessee.
The Commissioner upheld the view that the income was determined on the mercantile basis and that the income had accrued or arisen to the assessee within the meaning of section 4(1) (b)(i) of the Income tax Act.
and the mere fact that the amount was put in the suspense account did not alter the fact that the income had accrued to the firm Upon the matter being carried further in appeal by the assessee, the Tribunal held that the income had not accrued to the firm and that the amount should be excluded from taxation as not having been received during the accounting year.
The two questions aforementioned were then referred, at the instance of the Commissioner by the Tribunal to the High Court.
As already stated, the opinion on the first question was unanimous, both the learned Judges Satyanarayana Rao J. and Viswanatha Sastri J. holding against the assessee that there was no material for the Tribunal 's finding that the firm was being assessed on cash basis in previous years, the latter observing that finding in respect of 1942 1943 and 1943 1944 262 were mutually inconsistent, for in respect of the latter assessment year the Tribunal had held that the sum of Rs. 2,20,702 was assessable to income tax, though the amount merely stood as a credit to the firm in the books of the company and has not been drawn by the firm.
It is contended by Mr. Somayya on behalf of the firm that the finding of the Commissioner that the firm was not paid in cash in the prior years was set aside by the Tribunal and being a finding of fact ought not to have been interfered with by the High Court.
The firm had raised this question before the Tribunal at the time of the reference and had contended that no question of law arose from its order, as it was concluded by finding of fact.
The Tribunal, however repelled this contention observing that the question was one of ,law, as it related to the existence of any material for the finding.
The High Court upon such question being referred applied its mind to the precise question and came to the conclusion that there was No. material for the finding that the firm was being assessed on cash basis in the prior year.
The case of Commissinoer of Income tax, Bihar and Orissa vs Maharaiadhiraja of Darbhanga(1) does not support the contention of Mr. Somayya.
There the Income tax Officer had computed the profits of the business for a particular year by taking into account both actual receipts of interest in that year and sums treated by the assessee in that year as receipts of interest by their transference to the interest register from what might be regarded as a suspense account.
The Privy Council held that there was nothing illegel or contrary to principle in the computation arrived by the Income tax Officer.
The High Court under section 66(1) had to decide the question of law raised by the first question and decided it against the assessee.
Nor can it be said that in answering the question, the High Court acted illegally or contrary to principle.
Admittedly, the firm kept no separate books of accounts other than the (1) 60 I.A, 146.
263 books of accounts of the company in which there was a ledger containing entries relating to the remuneration and commis sion paid in cash to the firm.
The sum of Rs. 2,26,850 5 0 was debited as a revenue expenditure of the company as having been paid to the firm in the books of accounts of the company kept by the firm and was also allowed as a deduction in computing the profits and gains of the company for the purposes of income tax for 1941 1942.
The fact that certain moneys were drawn in cash by the firm from time to time does not necessarily lead to the inference that the firm kept its accounts on a cash basis.
Anyone familiar with commercial transactions knows that even in accounts kept on a mercantile basis there can be entries of cash credits and debits.
We see no flaw in the conclusion reached by the High Court on the first question.
The next question that falls to be determined is whether the sum of Rs. 2,26,850 5 0 was part of the profit and gains which had accrued to the firm during the accounting year 1941 1942.
The undisputed facts are that the amount in question was the commission earned by the firm as managing agents of the company.
In the books of the company main tained by the firm the aforesaid sum was debited as an item of revenue expenditure and the profits were computed after deducting that sum.
The amount was simultaneously credited to the managing agents ' commission account.
Under these circumstances, it is idle to contend that the aforesaid sum had not accrued.
There can be no doubt under the circum stances that the aforesaid sum was income which had accrued to the firm.
The only question is whether the aforesaid sum ceased to be, income by reason of the fact that on the 30th March the sum was carried to the suspense account by a reso lution of the directors as a result of the request made by the firm that the outstanding debt due from it may be written off.
It is true that the, sum was not drawn by the firm but that can hardly affect the question of its liability to tax, once it is established that the income had accrued or arisen to the firm 264 The mere fact that the company was withholding payment on account of a pending dispute cannot be held to mean that the amount did not accrue to the firm.
The resolution of the directors itself shows beyond doubt that the amount in question was treated as belonging to the firm though its payment was deferred on account of a pending dispute.
As Viswanatha Sastri J. tersely put it "The sum had irrevocably entered the debit side of the company 's account as a disbursement of managing agency commission to the firm and had been appropriated to the, firm 's dues and the same sum could not again be entered in a suspense account at a later date.
The sum, therefore, belonged to the firm and had to be included in the computation of the profits and gains that had accrued to it unless the firm had regularly kept its accounts on a cash basis, Which is not the case here" '.
A reference to the ledger folios in the books of the company shows that apart from the managing agents ' monthly remuneration of Rs. 1,00.0 which has duly entered in.
their account the amount in question also finds a place in the ledger as outstanding charges against the company and as credits in favour of the firm, The ' journal entries in the company 's books are the same.
Section 10 of the Act makes "profits and gains of busi ness, profession or vocation" ' carried on by an assessee liable to tax.
Section 12 makes "income from other sources in respect of income, profits and gains of every kind" liable to tax.
By section 13 income, profits and gains shall be computed for the purposes of both those sections in accordance with the method of accounting regularly employed by the assessee, but there is a proviso that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the c Computation shall be made upon such basis and in such manner as the Income tex Officer may determine.
265 The Income tax Officer in computing the income of the assessee would have followed the mercantile system or the cash basis whichever was employed by the assessee.
There is some evidence, though not conclusive, on the record that the assessee followed the mercantile system of accountancy.
This appears from the assessment orders field in the case, but apart from this, ' the Income tax Officer had full authority under the proviso to compute the profits upon such basis and in such manner as he thought fit.
The case of St. Lucia Usines and Estates Company, Ltd. vs Colonial Treasurer of St. Lucia(1) was relied upon strongly before us as it was in the High Court in support of the contention that the sum not having been paid to or realized by the firm no income can be said to have accrued to the firm.
In that case the assessee company sold all its property in St. Lucia in 1920 and ceased to reside or carry on business there.
In 1921 interest upon the unpaid part of the purchase price, was payable to it, but was not paid.
The company was liable to pay income tax for the year 1921 under the Income tax Ordinance, 1910, of St. Lucia, only if the interest above mentioned was 'income arising and, accruing ' to it in 1921.
It was held that though the interest was a debt accruing in 1921, it was not 'income arising or accruing ' in 1921, and that the company was not liable.
The decision was based upon the meaning of the word 'income ' as used in the Ordinance which was said to connote the idea of something "coming in".
Lord Wrenbury who delivered the judgment of the Privy Council construed the words "income arising or accruing" as money arising or accruing by way of income and not "debts arising or accruing".
The learned Law Lord observed "A debt has accrued to him (taxpayer) but income has not".
It is clear that the case related to the meaning of the word "Income" as used in the Ordinance and can be no authority on the question of the assessment of profits and gains under the Indian Income tax Act.
The next case relied upon is Dewar vs Commissioners of Inland Revenue(2).
In that case one of the executors be (1) (2) 266 came entitled to a legacy which carried interest for such time as it remained unpaid.
The testator 's estate was sufficient at all material times to enable interest to be paid on the legacy but the legatee acting on the advice of his accountant did not demand the legacy or interest thereon.
It was held that as the legatee had not received interest, there was no income in respect of which he could be charged to sur tax.
The decision turned upon the language of Schedule D, clause 1, sub clause (b) of the English Income Tax Act of 1918, as distinguished from clause I (a).
Clause I (a) deals with annual profits or gains arising or accruing from any kind of property whatever. but clause (b) imposes a tax in respect of "all interest of money, annuities and other annual profits." Lord Hanworth.
M. R. drew the distinction between the two clauses and observed that the case was one of interest of money and fell under clause (b) and not under clause (a).
Under that clause the tax was limited.to any interest of money whether the same is received and payable half yearly or any shorter or more distant period.
The learned Master of the Rolls observed: "If the interest on the legacy in this case has not arisen to the respondent, if he had not become the dominus of this sum, if it does not lie to his order in the hands of his agent, can it be said that it has arisen to him? I think the answer definitely upon the facts must be: No. it has not." Lord Maugham L. J. put the question thus: "I think in the present case two circumstances may be accurately stated in regard to the sum of pound 40,000 which it is said can be brought into charge.
The first is that the sum of pound 40,000 was not during the year of assessment a debt due by the executors to Mr. Dewar, and secondly, that the sum in question may never be paid or received at all." The case of Commissioner of Taxes vs The Melbourne Trust, Limited(1) turned on the construction of the charging (1) 267 section in the Income Tax Act 1903 of Victoria, whereby a company was liable to pay tax upon the profits earned, in or derived in or from Victoria.
In this case the surplus realized by the assessees over the purchase price for the assets sold after making all just deductions was taxed as profit but it was held that they were entitled to hold in suspense part of the surplus realised to meet possible losses on other assets and that under the circumstances the profit was earned for the purposes of the Act only when distributed to the share holders.
Having considered all these cases, we are of opinion that neither of them has any bearing upon the facts and circumstances of the present case.
Lastly it was urged that the commission could not be said to have accrued, as the profit of the business could be computed only after the 31st March, and therefore the com mission could not be subjected to tax when it is no more than a mere right to receive.
This argument involves the fallacy that profits do not accrue unless and until they are actually computed.
The computation of the profits whenever it may take place cannot possibly be allowed to suspend their accrual.
In the case of income where there is a condition that the commission will not be payable until the expiry of a definite period or the making up of the account, it might be said with some justification, though we do not decide it, that the income has not accrued, but there is no such condition in the present case.
Clauses 7 & 8 of the agreement which relate to the payment of the commission and the calculation of the profits mean no more than this that the commission will be quantified only after certain deductions had been made and not that the commission will not accrue until the profits have been ascertained.
The quantification of the commission is not a condition precedent to its accrual.
If the profits of the company are said to have accrued on the 31st of March, upon a parity of reasoning, it must be conceded that the commission also accrued on the same date.
The date has as much to do with the accrual of the commission as it has to do with the accrual of the profits.
It was faintly suggested that the managing.
agency was not a business but this is immaterial for income tax purposes because section 13 will apply to cases both under sections 10 268 and 12, so we refrain from deciding the point.
We may, how ever, point out in passing that in two cases Tata Hydro Electric Agencies, Ltd. vs Commissioner of Income tax Bombay(1) and Commissioner of Income tax.
Bombay Presidency vs Tata Sons Ltd.(2) it was assumed that the managing agency is business but the point was directly decided in Inderchand Hari Ram vs Commissioner of Income tax, U.P. and C.P.(3) that it is so.
For the foregoing reasons, we accept the view taken by Viswanatha Sastri J. and allow the appeals.
The respondent shall pay the costs of the Commissioner both in this court and before the High Court.
Appeals allowed.
| Where, under the terms of a managing agency agreement the assessee firm who were the managing agents of a company were entitled to a certain percentage of the profits as their commission and in the books of the company maintained by the firm a sum of Rs. 2,26,850 odd was shown as commission due to the firm on the profits for the year 1941 42 and the said sum was also debited as an item of business expenditure and credited to the managing agents ' commission account, but the aforesaid sum was subsequently carried to a suspense account by a resolution of the company as a result of a request made by the firm that a debt due by the firm to the company may be written off : Held, that, as the assessee kept the accounts on the mercantile system the commission accrued to the assessee when the commission was credited to it in the accounts, and the subsequent carrying over of the amount of the commission to a suspense account pending the settlement of the dispute between the company and the assessee could not affect assessee 's liability to be taxed on this income.
Held further, that the fact that the profits of the business could be computed only after the 31st of March, 1942, was Immaterial as quantification of the commission is not a condition precedent to its accrual.
|
l Appeal No. 191 of 1952.
Appeal by special leave granted by the Supreme Court on the 21st May, 1951, from the Judgment and Decree dated the 13th December, 1949, of the High Court of Judicature at Madras (Rao and Somasundaram JJ.) in Appeal No. 529 of 1946 arising out of the Judgment and Decree dated the 20th February, 1946, of the Court of Subordinate Judge of Coimbatore in O.S. No. 138 of 1945.
P.Somasundaram (R. Ganapathy Iyer, with him) for the appellant.
B.Somayya (K. R. Chowdhury, with him) for respondent No. 1. 1953.
October 14.
The Judgment of the Court was deli vered by MUKHERJEA J.
This appeal, which has come before us on special leave, is directed against a judgment and decree of a Division Bench of the Madras High Court dated December 13, 1949, affrming, with slight modification, those of the Subordinate Judge, Coimbatore, passed in O.S. No. 138 of 1945.
The suit was commenced by the plaintiff, who is res pondent No. I in this appeal for specific allotment, on partition, of his one third share in the properties described in the plaint, on the allegation that they were the joint properties of a family consisting of himself, his father, the defendant No. 1, and his brother, the defendant No. 2, and that he was entitled in law to one third share in the same.
It appears that the plaintiff and defendant No. 2, who are two brothers, are both sons of defendant No. I by his first wife who predeceased her husband.
After the death of plaintiff 's mother, the defendant No. I married again and his second wife is defendant No. 3 in the suit.
The allegations in the plaint, in 245 substance, are that after the step mother came into the house, the relation between the father and his sons became strained and as the father began to assert an exclusive title to the joint family property, denying any rights of his sons thereto, the present suit had to be brought.
The properties in respect of which the plaintiff claims partition are described in Schedule B to the plaint.
They consist of four items of agricultural land measuring a little over 5 acres in the aggregate, one residential house in the town of Erode and certain jewellery, furniture and brass utensils.
In addition to these it is averred in paragraph I I of the plaint that there is a sum of about Rs. 15,000 deposited in the name of the first defendant in the Erode Urban Bank Limited; that money also belongs to the joint family and the plaintiff is entitled to his share therein.
The defendant No. I in his written statement traversed all these allegations of the plaintiff and denied that there was any joint family property to which the plaintiff could lay a claim.
His case was that items I and 2 of Schedule B lands as well as the house property were the self acquired properties of his father and he got them under a will executed by the latter as early as in the year 1912.
The other items of immovable property as well as the cash, furniture and utensils were his own acquisitions in which the sons had no interest whatsoever.
As regards the jewels mentioned in the plaint, it was said that only a few of them existed and they belonged exclusively to his wife the defendant No. 3.
The defendant No. 2, who is the brother of the plaintiff, supported the plaintiff 's case in its entirety.
The defendant No. 3 in her written statement asserted that she was not a necessary party to the suit and that whatever jewellery there were belonged exclusively to her.
After hearing the case the trial judge came to the con clusion that properties bequeathed to defendant No. I by his father should be held to be ancestral properties in his hands and as the other properties were acquired by defendant No. 246 1 out of the income of the ancestral estate, they also became impressed with the character of joint property.
The result was that the Subordinate Judge made a preliminary decree in favour of the plaintiff and allowed his claim as laid in the plaint with the exception of certain articles of jewellery which were held to be non existent.
Against this decision, the defedant No. I took an appeal to the High Court of Madras.
The High Court dismissed the appeal with this variation that the jewels such of them as existed were held to belong to defendant No. 3 alone and the plaintiff 's claim for partition of furniture and brass utensils was dismissed.
The High Court rejected the defendant No. 1 's application for leave to appeal to this court but he succeeded in getting special leave under article 136 of the Constitution.
The substantial point that requires consideration in the appeal is whether the properties that the defendant No. I got under the will of his father are to be regarded as ancestral or self acquired properties in his hands.
If the properties were ancestral, the sons would, become co owners with their father in regard to them and as it is conceded that the other items of immovable property were mere accretions to this original nucleus, the plaintiff 's claim Must Succeed.
If, on the other hand, the bequeathed properties could rank as self acquired properties in the hands of defendaant No. 1, the plaintiff 's case must fail.
The law on this point, as the courts below have pointed out, is not quite uniform and there have been conflicting opinions expressed upon it by different High Courts which require to be examined carefully.
For a proper determination of the question, it would be convenient first of all to refer to the law laid down in Mitakshara in regard to the father 's right of disposition over his self acquired property and the interest which his sons or grandsons take in the same.
Placitum 27, chapter 1, section I of Mitakshara lays down: "It is settled point that property in the paternal or ancestral estate is by birth, though the father has independent 247 power in the disposal of effects other than the immovables for indispensable acts of duty and for purposes prescribed by texts of law as gift through affection, support of the family, relief from distress and so forth; but he is subject to the control of his sons and the rest in regard to the immovable estate, whether acquired by himself or inherited from his father or other predecessors since it is ordained, 'though immovables or bipeds have been acquired by man himself, a gift or sale of them should not be made without convening all the sons '.
" Mitakshara insists on the religous duty of a man not to leave his family without means of support and concludes the text by saying: "They who are born and they who are yet unbegotten and they who are still in the womb, require the means of support.
No gift or sale should therefore be made." Quite at variance with the precept which seems to restrict the father 's right of disposition over his self acquired property in an unqualified manner and in the same way as ancestral lands, there occur other texts in the commentary which practically deny any right of interference by the sons with the father 's power of alienation over his self acquired property.
Chapter 1, section 5, placitum 9 says: "The grandson has a ri ght of prohibition if his un separated father is making a donation or sale of effects in herited from the grandfather: but he has no right of inter ference if the effects were acquired by the father.
On the contrary he must acquisce, because he is dependent.
" The reason for this distinction is explained by the au thor in the text that follows: "Consequently the difference is this: although he has a right by birth in his father 's and in his grandfather 's property; still since he is dependent on his father in regard to the paternal estate and since the father has a predominant interest as it was acquired by himself, the son must acquiesce in the father 's disposal of his own acquired property." 248 Clearly the latter passages are in flat contradiction with the previous ones and in an early Calcutta case(1) a reconciliation was attempted at by taking the view that the right of the sons in the self acquired property of their father was an imperfect right incapable of being enforced at law.
The question came pointedly for consideration before the Judicial Committee in the case of Rao Balwant vs Rani Kishori(2) and Lord Hobhousel who delivered the judgment of the Board, observed in course of his judgment that in the text books and commentaries on Hindu Law, religious and moral considerations are often mingled with rules of positive law.
It was held that the passages in Chapter 1, section 1, verse 27 of Mitakshara contained only moral or religious precepts while those in section 5, verses 9 and 10 embodied rules of positive law.
The latter consequently would override the former.
It was held, therefore, that the father of t joint Hindu family governed by Mitakshara law has full and uncontrolled powers of disposition over his self acquired immovable property and his male issue could not interfere with these rights in any way.
This statement of the law has never been challenged since then and, it has been held by the various High Courts in India, and in our opinion rightly, that a Mitakshara father is not only competent to sell his self acquired immovable property to a stranger without the concurrence of his sons(2), but he can make a gift of such property to one of his own sons to the detriment of another(3); and he can make even an unequal distribution amongst his heirs(4).
So far the law seems to be fairly settled and there is no room for controversy.
The controversy arises, however, on the question as to what kind of interest a son would take in the self acquired property of his father which he receives by way of gift or testamentary bequest from him, vis a vis his own male issue.
Does it remain self acquired property in his (1) Vide Muddun, vs Ram, (2) 25 I.A. 54.
(3) Vide Sital vs Madho T.L.R.
I All. 394.
(4) Vide Bawa vs Rejeah, 249 hands also untrammelled by the rights of his sons and grandsons or does it become ancestral property in his hands, though not obtained by descent, in which his male issue be come co owners with him? This question has been answered in different ways by the different High Courts in India which has resulted in a considerable diversity of judicial opinion.
It was held by the Calcutta High Court(1) as early as in the year 1863 that such property becomes ancestral property in the hands of his son as if he bad inherited it from his father.
In the other High Courts the questions Ion is treated as one of construction to be decided in each case with reference to its facts as to whether the gifted property was intended to pass to the sons an ancestral or self acquired, property; but here again there is a sharp cleavage of judicial opinion.
The Madras High Court has held(2) that it is undoubtedly open to the father to determine whether the property which be has bequeathed shall be ancestral or self acquired but unless he expresses his intention that it shall be self acquired, it should be held to be ancestral.
The Madras view has been accepted by a Full Bench of the Patna High Court(3) and the latest decision of the Calcutta High Court on this point seems to be rather leaning towards it(4).
On the other hand, the Bombay view is to hold such gifted property as self acquisi tion of the donee unless there is clear expression of intention on the part of the donor to make it ancestral(5), and this view has been accepted by the Allahabad and the Lahore High Courts(6).
This conflict of judicial opinion was brought to the notice of the Privy Council in Lal Ram Singh vs Deputy Commissioner of Partabgarh(7), but the Judicial Committee left the question open as it was not necessary to decide it in that case. (1) Vide Muddan vs Ram (2) Vide Nagalingham vs Ram Chandra, I. (3) Vida Bhagwat vs Mst.
Kaporni, I.L.R. 23 Pat.
(4) Vida Lala Mukti Prasad vs Srimati lswari.
24 C.W.N. 938.
(8) Vide Jugmohan Das vs Sir Mangal Das.
(6) Vide Parsotam vs Janki Bai, I.L.R. 29 All 354; Amararanth vs Guran, A.I.R. 1918 La],.
(7) 64 T. A. 265.
250 In view of the settled law that a Mitakshara father has absolute right of disposition over his self acquired property to which no exception can be taken by his male descendants, it is in our opinion not possible to hold that such property bequeathed or gifted to a son must necessarily, and under all circumstances, rank as ancestral property in the hands of the donee in which his sons would acquire co ordinate interest.
This extreme view, which is supposed to be laid down in the Calcutta case(1) referred to above, is sought to be supported on a two fold ground.
The first ground is the well known doctrine of equal ownership of father and son in ancestral property which is enunciated by Mitakshara on the authority of Yagnavalkya.
The other ground put forward is that the definition of "self acquisition" as given by Mitakshara does not and cannot comprehend a gift of this character and consequently such gift cannot but be partible property as between the donee and his sons.
So far as the first ground is concerned, the foundation of the doctrine of equal ownership of father and son in an cestral property is the well known text of Yagnavalkya(2) which says: "The ownership of father and son is co equal in the acquisitions of the grandfather, whether land, corody or chattel.
" It is to be noted that Vijnaneswar invokes this passage in Chapter 1, section 5 of his work, where he deals with the division of grandfather 's wealth amongst his grandsons.
The father 's gradsons, it is said, have a right by birth in the grand estate equally with the sons and consequently are entitled to shares on partition, though their shares would be determined per stirpes and not per capita.
This discussion has absolutely no bearing on the present question.
It is undoubtedly true that according to Mitakshara, the son has a right, by birth both in his father 's and grandfather 's estate but as has been jointed out before.
a distinction is made in this respect by Maitakshara itself.
In the ancestral or grandfather 's property (1) Vide Muddun vs Ram, 6 NY.
R. 71.
(2) Vide Yagnavalkya.
Book 2. 129.
251 in the hands of the father, the son has equal rights with his father; while in the self acquired property of the father, his rights are unequal by reason of the father having an independent power over or predominent interest in the same(1).
It is obvious, however, that the son can assert this equal right with the father only when the grandfather 's property has devolved upon his father and has become ancestral property in his hands.
The property of the grandfather can normally vest in the father as ancestral property if and when the father inherits such property on the death of the grandfather or receives it by partition, made by the Grandfather himself during his lifetime.
On both these occasions the grand father 's property comes to the father by virtue of the latter 's legal right as a son or descendant of the former and consequently it becomes ancestral property in his hands.
But when the father obtains the grandfather 's property by way of gift, he receives it not because he is a son or has any legal right to such property but because his father chose to bestow a favour on him which he could have bestowed on any other person as well.
The interest which he takes in such property must depend upon the will of the grantor.
A good deal of confusion.
We think has arisen by not keeping this distinction in mind.
To find out whether a property is or is not ancestral in the hands of a particular person, not merely the relationship between the original and the present holder but the mode of transmission also must be looked to; and the property can ordinarily be reckoned as ancestral only if the present holder has got it by virtue of his being a son or descendant of the original owner.
The Mitakshara, we think, is fairly clear on this point.
It has placed the father 's gifts under a separate category altogether and in more places than one has declared them exempt from partition.
Thus in Chapter 1.
section 1, placitum 19 Mitakshara refers to a text of Narada which says: (1) Vide Mayne 's Hindu Law 11th edition, page 336.
252 "Excepting what is gained by valour, the wealth of a wife and what is acquired by science which are three sorts of property exempt from partition , and any favour conferred by a father.
" Chapter 1, section 4 of Mitakshara deals with effects not liable to partition and property "obtained through the father 's favour" finds a place in the list of things of which no partition can be directed(1).
This is emphasised in section 6 of chapter I which discusses the rights of posthumous sons or sons born after partition.
In placitum 13 'of the section it is stated that though a son born after partition takes the whole of his father 's and mother 's property, yet if the father and mother has affectionately bestowed some property upon a separated son that must remain with him.
A text of Yagnavalkya is then quoted that "the effects which have been given by the father and by the mother belong to him on whom they are bestowed"(2).
It may be noted that the expression "obtained through favour of the father" (pitr prasada labdha) which occurs in placitum 28, section 4 of Mitakshara is very significant.
A Mitakshara father can make a partition of both the ancestral and self acquired property in his hands any time he likes even without the concurrence of his sons , but if he chooses to make a partition.
he has got to make it in accordance with +the directions laid down in the law.
Even the extent of inequality, which is permissible as between the eldest and the Younger sons, is indicated in the text(3).
Nothing depends upon his own favour or discretion.
When, however, he makes a gift which is only an act of bounty, he is unfetterd in the exercise of his discretion by any rule or dictate of law.
It is in these gifts obtained through the favour of the father that Vijnaneswar, following the earlier sages, declares the exclusive right of the sons.
We hold, therefore, that there is no warrant for saying that according to the Mitakshara, an (1) Vider C. Placitum 28 of Mitakshara.
(2) Vide Yagnavalkya 2, 124.
(3) Vide Mitakshara chapter 1, section 2. 253 affectionate gift by the father to the son constitutes ipso facto ancestral property in the hands of the donee.
If this is the correct view to take, as we think it is, it ' would furnish a complete answer to the other contention indicated above that such gifted property must be held partible between the father and the sons as it does not come within the definition "self acquisition", as given by Mitak shara.
In chapter 1, section 4 of his work, Vijnaneswar enumerates and deals with properties which are not liable to partition.
The first placitum of the section defines what a "self acquisition" is.
The definition is based upon the text of Yagnavalkya that "whatever is acquired by the coparcener himself without detriment to the father 's estate as present from a friend or a gift at nuptials, does not appertain to the co heirs.
" What is argued is this, that as the father 's gift cannot be said to have been acquired by the son without detriment to the father 's estate, it cannot be regarded as selfacquisition of the son within the meaning of the definition given above and consequently cannot be exempted from partition.
This argument seems to us to be untenable.
Section 4 of the first chapter in Mitakshara enumerates various items of property which, according to the author, are exempt from partition and self acquisition is only one of them.
Father 's gifts constitute another item in the exemption list which is specifically mentioned in placitum 28 of the section.
We agree with the view expressed in the latest edition of Mayne 's Hindu Law that the father 's gift being itself an exception, the provision in placitum 28 cannot be read, as requiring that the gift must also be without detriment to the father 's estate, for it would be a palpable contradition to say that there could be any gift by a father out of the estate without any detriment to the estate(1).
There is no contradition really between, placitum I and placitum 28 of the section.
Both are separate and independent items of exempted properties, of which no partition can be made.
(1) Mayane 's Hindu Law, 11th edition,paragraph 280,page 344 254 Another argument is stressed in this connection which seems to have found favour with the learned Judges of the Patna High Court who decided the Full Bench case(1) referred to above.
It is said that the exception in regard to father 's gift as laid down in placitum 28 has reference only to partition between the donee and his brothers but so far as the male issue of the donee is concerned, it still remains partible.
This argument, in our opinion, is not sound.
If the provision relating to self acquisition is applicable to all partitions, whether between collaterals or between the father and his sons, there is no conceivable reason why placitum 28, which occurs in the same chapter and deals with the identical topic should not be made applicable to all cases of partition and should be confined to collaterals alone.
The reason for making this distinction is undoubtedly the theory of equal ownership between the father and the son ancestral property which we have discussed already and which in our opinion is not applicable to the father 's gifts at all.
Our conclusion, therefore, is that a property gifted by a father to his son could not become ancestral property in the hands of the donee simply by reason of the fact that the donee got it from his father or ancestor.
As the law is accepted and well settled that a Mitak shara father has complete powers of disposition over his selfacquired property, it must follow as a necessary consequence that the father is quite competent to provide expressly, when he makes a gift, either that the donee would take it exclusively for himself or that the gift would be for the benefit of his branch of the family.
If there are express provisions to that effect either in the deed of gift or a will, no difficulty is likely to arise and the interest which the son would take in such property would depend upon the terms of the grant.
If, however, there are no clear words describing the kind of interest which the donee is to take, the question would be one of construction and the court would have to collect the intention of the donor from the language of the document taken (1) Vide Bhagwant vs Mst, Kaporni, I.L.R. 23 Pat.
255 along with the surrounding circumstances in accordance with the wellknown canons of construction.
Stress would certainly( have to be laid on the substance of the disposition and not on its mere form.
The material question which the court( would have to decide in such cases is, whether taking the document and all the relevant facts into consideration, it could be said that the donor intended to confer a bounty upon his son exclusively for his benefit and capable of being dealt with by him at his pleasure or that the apparent gift was an integral part of a scheme for partition and what was given to the son was really the share of the property which would normally be allotted to him and in his branch of the family on partition.
In other words, the question would be whether the grantor really wanted to make a gift of his properties or to partition the same.
As it is open to the father to make a gift or partition of his properties as he himself chooses, there is, strictly speaking, no presumption that he intended either the one or the other.
It is in the light of these principles that we would pro ceed now to examine the facts of this case.
The will of his father under which defendant No. I got the two items of Schedule B properties is exhibit P 1 and is dated the 6th of June.
The will is a simple document.
It recites that the testator is aged 65 and his properties are all his own which he acquired from no nucleus of ancestral fund.
He had three sons, the eldest of whom was defendant No. 1.
In substance what the will provides is that after his death, the A Schedule properties would go to his eldest son, the B Schedule properties to his second son and the properties described in Schedule C shall be taken by the youngest.
The sons are to enjoy the properties allotted to them with absolute rights and with powers of alienation such as gift, exchange, sale, etc.
from son to grandson hereditarily.
The testator, it seems, had already given certain properties to the wives of his two brothers and to his own wife also.
They were to enjoy these properties during the terms of their natural lives and after their death, they would vest in one or the other of his sons.
as indicated in the will.
The D Schedule property 256 was set apart for the marriage expenses of his third son and an unmarried daughter.
Authority was given to his wife to sell this property to defray the marriage expenses with its sale proceeds.
It seems to us on reading the document in the light of the surrounding circumstances that the dominant intention of the testator was to make suitable provisions for those of his near relations whom he considered to have claims upon his affection and bounty.
He did not want simply to make a division of his property amongst his heirs in the same way as they themselves would have done after his death, with a view to avoid disputes in the future.
Had the testator contemplated a partition as is contemplated by Hindu law, he would certainly have given his wife a share equal to that of a son and a quarter share to his unmarried daughter.
His brothers ' wives would not then come into the picture and there could be no question of his wife being authorised to sell a property to defray the marriage expenses of his unmarried son and daughter.
The testator certainly wanted to make a distribution of his properties in it way different from what would take place in case of intestacy.
But what is really material for our present purpose is his intention regarding the kind of interest which his sons were to take in the properties devised to them.
Here the will is perfectly explicit and it expressly vests the sons with absolute rights with full powers of alienation by way of sale, gift and exchange.
There is no indication in the will that the properties bequeathed were to be held by the sons for their families or mate issues and although the will mentions various other relations, no reference is made to sons ' sons at all.
This indicates that the testator desired that his sons should have full ownership in the properties bequeathed to them and he was content to leave entirely to his sons the care of their own families and children.
That the testator did not want to confer upon the sons the same rights as they could have on intestacy is further made clear by the two subsequent revocation instruments executed by the testator.
By the document Exhibit P 2 dated, the Z6th 257 of March, 1914, he revoked that portion of his will which gave the Schedule C property to his youngest son.
As this son had fallen into bad company and was disobedient to his father,.
he revoked the bequest in his favour and gave the same properties to his other two sons with a direction that they would pay out of it certain maintenance allowance to their youngest brother, or to his family if he got married.
There was a second revocation instrument, namely, Exhibit P 3, executed on 14th April, 1914, by which the earlier revo cation was cancelled and the properties intended to be given to the youngest son were taken away from the two brothers and given to his son in law and the legatee was directed to hand them over to the third son whenever he would feel con fident that the latter had reformed himself properly.
In our opinion, on reading the will as a whole the conclusion becomes clear that the testator intended the legatees to take the properties in absolute right as their own self acquisition without being fettered in any way by the rights of their sons and grandsons.
In other words, he did not intend that the property should be taken by the sons as ancestral property.
The result is that the appeal is allowed, the judgments and decrees of both the courts below are set aside and the plaintiff 's suit is dismissed.
Having regard to the fact that the question involved in this case is one of considerable importance upon which there was considerable difference of judicial opinion that the plaintiff himself is a pauper, we direct that each party shall bear his own costs in all the courts.
Appeal allowed.
Agent for the respondent No. 1: M.S.K. Aiyangar.
| Property gifted by a father to his son could not become ancestral property in the hands of the son simply by reason of the fact that he got it from his father.
The father is quite competent when he makes a gift, to provide expressly either that the donee would take it exclusively for himself or that the gift would be for the benefit of his branch of the family and if there are express provisions to that effect in the deed of gift or will, the interest which the son would take in such property would depend on the terms of the grant.
If there are no clear words describing the kind of interest which the donee is to take, the question would be one of construction and the court would have to collect the intention of the donor from the language of the document taken along with the surrounding circumstances in accordance with the established canons of construction.
The material question in such cases would be whether the grantor really wanted to make a gift of the properties to his son or the apparent gift was only an integral part of a scheme to partition the same.
There is no presumption that he intended either the one or the other, as it is open to the father to make a gift or partition his properties as he himself chooses.
Muddun vs Ram , Nagalingam vs Ramachandra (I.L.R. , Bhagwat vs Mst.
Kaporni (I.L.R. 23 Pat? 599), Jugmohan Das vs Mangal Das (I.L.R. , Parsottam vs Jankibai (I.L.R 29 All. 354), Amarnath vs Guran (A.I.R. Lal Ram Singh vs Deputy Commissioner, Partabgarh (64 I.A. 265) referred to.
Where a testator who had 3 sons, after giving certain properties to his wife and other relations, provided that the properties in Schedules A,B and C of the will which were his self acquired properties shall be taken by his eldest, second and third son respectively, and that the sons shall enjoy the properties allotted to them with absolute rights and with powers of alienation such as gift, exchange, sale etc.
from son to grandson hereditarily: LB(D)2SCT 2(a) 244 Held, that as the will expressly vested the sons with abso lute rights with full powers of alienation, the property be queathed to them was not ancestral property in their hands vis a vis their own male issue.
|
Appeal No. 4 of 1950.
Appeal from the High Court of Judicature of Calcutta (Sir Trevor Harries C.J. and Mukherjea J.) from a judgment and decree dated May 30, 1948, in Appeal No. 21 of 1947 confirming with modifications the decree of a single Judge of the same High Court (Ormond J.) dated January 24, 1947, in suit No. 1031 of 1945.
108 842 N.C.Catterjee (Samarendra Nath Mukherje, with him) for the appellant.
P.L. Banerjee (Upendra Chandra Mullick, with him) for the respondent. 1950.
December 1.
The Judgment of the Court was deliv ered by DAS J.
This is an appeal by the defendant in a suit for specific performance against the judgment and decree of the High Court of Judicature at Fort William in Bengal (Sir Trevor Hatties C.J. and Mukherjea J.) dated May 30, 1948, dismissing his appeal and confirming, with certain modifica tions, the judgment and decree for specific performance passed by Ormond J. on January 24, 1947.
There is no sub stantial dispute as to the facts leading up to tim suit out of which the present appeal has arisen and they may shortly be stated: Maharaja Sris Chandra Nandy of Cossimbazar is the owner of premises No. 374 Upper Chitpur Road in the town of Cal cutta (hereinafter referred to as the "said premises").
By an Indenture of lease made on April 27, 1931, the Maharaja as manager of the Cossimbazar Raj Wards Estate which was then under the management of the Court of Wards demised tim said premises to one Madan Gopal Daga for a term of 51 years commencing from May 1, 1931, at and for the monthly rent of Rs. 1,083 5 3 and upon terms and conditions contained there in.
By sub clause (6) of clause 2 of the said Indenture the lessee covenanted, amongst other things, "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the case of respectable or responsible person . . " There was the usual proviso for re entry for non payment of rent for three months or for breach of any of the lessee 's covenants, without prejudice to the lessor 's right of action for such breach.
On March 25, 1943, Madan Gopal Daga, with the written consent of the lessor, assigned the unexpired resi due of the lease to the defendant who 843 was accepted as the lessee by the lessor.
By an agreement said to have been arrived at by correspondence exchanged between the plaintiff and the defendant and their respective solicitors between January 27, 1945, and February 2, 1945, the defendant is alleged to have agreed to assign the said lease to the plaintiff for the unexpired residue of the term with effect from February 1, 1945, at and for the price of Rs. 1,80,000 and upon terms and conditions contained in the correspondence to which reference will be made in greater detail hereafter.
On February 21, 1945, the defendant wrote a letter to the lessor intimating that he had agreed to assign his interest in the lease to the plaintiff and re questing the lessor to give his consent in writing to such assignment.
On March 5, 1945, the lessor replied that the question of his giving consent to the transfer of the lease could not be entertained as he had already determined the lease and that in the circumstances the whole initiative was in the hands of the defendant.
This letter clearly indicated that the lease had been determined for non payment of rents and it obviously implied that it was for the defendant to get the lease revived by paying up the arrears of rent so that the question of giving consent to an assignment of the lease might be considered by the lessor.
On March 8, 1945, the defendant by his solicitors ' letter informed the plain tiff 's solicitors that the defendant had approached the lessor but had failed to secure his consent and that, as no valid transfer could be made without such consent and the agreement for sale was subject to such consent being ob tained, the defendant was reluctantly compelled to cancel the agreement.
The plaintiff by his solicitors ' letter of March 10, 1945, maintained that the agreement was not sub ject to the alleged condition and that the defendant was not entitled to cancel the agreement.
It was pointed out that under the terms of the lease the lessor could not refuse his consent to the transfer of the lease to a respectable or responsible person which the plaintiff undoubtedly was.
It is not necessary to refer to the further correspondence that followed in which each 844 party maintained his own contention.
On March 17, 1945, the lessor filed a suit (being suit No. 425 of 1945) in the High Court against the defendant for the recovery of the demised premises on the ground that the lease had been determined.
It was during the pendency of that suit that on July 4, 1945, the suit for specific performance of the agreement to assign the lease out of which the present appeal has arisen was filed by the plaintiff against the defendant.
On July 13, 1945, the lessor 's suit for ejectment was settled by the defendant consenting to a decree for Rs. 59,213 11 0 for arrears of rent which was paid up.
There is no dispute that the forfeiture of the lease for non payment of rent was waived and the lease was accordingly revived.
Shortly after the settlement of the ejectment suit the defendant on August 6, 1945, applied to the lessor for his consent to the assignment of the lease and on the same day the lessor in reply declined to give his consent without assigning any reason whatever.
The suit for specific per formance came up for disposal before Ormond J. in November 1946 when it was heard in part and was adjourned.
It was eventually further heard in January 1947 and finally dis posed of on January 23, 1947, when Ormond J. passed a decree against the defendant for specific performance of the agree ment.
The decree provided that in the event of the defend ant being unable within a fortnight from the date of the decree to obtain the written consent of the lessor the assignment should be made without such consent.
The defend ant appealed.
After two days ' hearing, "in order to clear up the matter" the appeal Court "gave the plaintiff an opportu nity to examine the Maharaja as a witness in this case so that all relevant facts might be brought out and placed before the Court for the purpose of enabling it to come to a proper decision on this point.
" The appeal was accordingly adjourned and the lessor was examined on commission and his evidence was filed in the proceedings.
After further hear ing the appeal Court dismissed the defendant 's appeal and confirmed the decree for specific performance of the agree ment 845 without the need for obtaining the consent of the lessor prior to the execution of the deed of assignment in favour of the plaintiff.
This decree was subsequently amended by inserting therein a provision enabling the plaintiff to set off from the purchase price the amount of rent payable as and from February 1, 1945, until the date of conveyance less all outgoings and interest on the purchase price at four per cent.
per annum from that date to the date of the convey ance.
The defendant has now come up before us in appeal from this judgment and decree of the appeal Court.
The first point urged by learned counsel appearing in support of this appeal is that, being subject to the consent of the lessor, the agreement was contingent on the defendant obtaining such consent and as the defendant could not secure the lessor 's consent no effective agreement came into being which could be ordered to be specifically performed.
The determination of this question must depend on a correct analysis and ascertainment of the meaning and import of the correspondence by which the agreement is said to have been arrived at.
It was on January 9.7, 1945, that the plaintiff offered to purchase the defendant 's leasehold interest in the said premises upon terms and conditions set forth in the plaintiff 's letter of that date.
Clauses 3 and 4 of those terms were as follows: "(3).
The lease will be transferred in my favour as from the 1st February, 1945, and I shall be entitled to recover rents from the tenants as from that date and shall pay the rent to the superior landlord and municipal taxes from that date.
You shall have to obtain the necessary consent for the transfer of the lease in favour of myself or my nominees from the said Maharaja of Cossimbazar before the execution of the transfer of lease in my favour. ' ' The defendant replied to the plaintiff 's above letter on January 28, 1945.
By this reply the defendant expressed his willingness to transfer the lease to the plaintiff on terms contained therein.
Clauses 3 and 4 of this letter were as follows: 846 "(3) If your final acceptance as stated above is re ceived within 30th January current and if I am able to obtain the consent of Maharaja Cossimbazar for transfer of the leasehold interest wi.
thin the first week of February, 1945, I agree to your para 3.
(4) Your para 4 is agreed to but the name or names of the persons to be mentioned in the sale deed for whom per mission is to be taken from Maharaja Cossimbazar should be clearly stated with their respective addresses.
" It is quite clear that no agreement was concluded by these two letters for the defendant 's letter was not an unconditional acceptance of the plaintiff 's offer but amounted in law to only a counter offer.
By clause 3 the defendant offered to transfer the lease to the plaintiff as from February 1, 1945, so as to entitle the plaintiff to realize the rents from that date and to be liable to pay the rent to the lessor also from that date on two conditions, namely, that the plaintiff 's acceptance was received within January 30, 1945, and the defendant was able to obtain the lessor 's consent within the first week of February, 1945.
This clause did not make the offer itself contingent on the obtaining of the lessor 's consent but made one of the terms of the offer, namely, that the lease would be transferred as from February 1, 1945, conditional on the obtaining of the lessor 's consent within the first week of February, 1945.
Likewise, subject to the name of the assignee being clearly stated the defendant by clause 4 offered to obtain the lessor 's consent to the assignment of the lease.
Clause 4 of the defendant 's letter was not so expressed as to make the defendant 's offer contingent on his obtaining the les sor 's consent.
On the contrary, clause 4 constituted one of the terms of the offer which, on the offer being accepted, would become binding on the defendant as one of the terms of the agreement.
The plaintiff, however, does not appear to have accepted the defendant 's counter offer but on January 29, 1945, through his solicitors made a fresh offer to purchase the defendant 's leasehold interest at Rs. 1,80,000 on the following terms: 847 "(a) That the earnest money will be Rs. 5,000 (Rupees five thousand) instead of Rs. 30,000.
(b) Our client will have the conveyance in his own favour.
The consent of the landlord will be obtained by you before the completion of sale.
(c) That your client will complete the conveyance within a month after the receipt by us of all the original title deeds with you.
(d) That the transfer of the property in favour of our client will take effect on and from the 1st February, 1945, irrespective of the date of the conveyance, he being enti tled to all the rents, issues and profits and being liable for all the liabilities in respect thereof since the said date.
(e) That our client will not be liable to pay your Solici tor 's Bill of cost in respect of the sale.
" Again, it will be noticed that by clause (b) the offer was not made contingent on the obtaining of the lessor 's consent but the plaintiff insisted on the defendant 's obtaining such consent as a substantive term of his offer so that if the offer by being accepted ripened into an agree ment the defendant would be bound to obtain the lessor 's consent as a term of such agreement.
The defendant by his solicitors ' letter dated February 1, 1945, purported to accept the plaintiff 's last offer with a slight reservation, namely , "As regards clause (d) of your said letter, it is dis tinctly understood that the same should be given effect to only in case the conveyance is completed in terms of clause (c) of your said letter.
" On February 2, 1945, the plaintiff by his solicitors ' letter of that date unconditionally accepted this reserva tion and so a concluded agreement was arrived at between the parties.
This agreement was not, for its coming into being, contingent or conditional on the obtaining of the lessor 's consent.
The obligation to obtain the lessor 's consent was cast upon the defendant as a term of the agreement.
In our judgment the Court below was right in holding that the agreement 848 itself was not contingent as contended for by the appellant.
The contentions next advanced by learned counsel for the appellant relate to the lessee 's covenant contained in sub clause (6) of clause 2 of the lease to which reference has already been made.
The legal incidents of such a covenant are now well established by judicial decisions referred to in the judgment of the High Court and it is not necessary to refer to them in detail.
Suffice it to say, that the words "such consent, however, not to be unreasonably withheld in the case of respectable or responsible person" contained in the covenant do not amount to a separate or independent covenant by the lessor that he would not refuse consent except upon reasonable grounds in the case of respectable or responsible person, but that those words limit or qualify the lessee 's covenant not to assign the demised premises without the consent in writing of the lessor.
In other words, those words have the effect of relieving the lessee from the burden of this covenant if the lessor withholds his consent unreasonably in case of proposed assignment to a respectable or responsible person.
In this view of the matter, the plaintiff contended that he being a respectable and responsible person the lessor had unreasonably withheld his consent to the proposed assignment to him and had consequently relieved the defendant from the burden of his covenant so that the defendant could legally and validly assign the lease to him without such consent of the lessor.
The first objection taken by the appellant to this contention of the plaintiff is that in his plaint the plain tiff insisted on the defendant obtaining the lessor 's consent and that he should not have been permitted to make this new case at the hearing.
Both the trial Court and the appeal Court held that there was, strictly speaking, no element of surprise, particularly because the plaintiff relied upon facts admitted and proved by the defendant himself and that it was open to him to take this point.
We may also add that this point was in a manner indicated in the plaint 849 itself for in paragraph 11 thereof it was pleaded that the plaintiff was a responsible and respectable person and that if consent to assign in his favour was withdrawn such with drawal would be unreasonable and would not be valid and binding.
In view of such pleading we are unable to say that the point raised by the plaintiff at the trial was an en tirely new point or that the defendant was taken by sur prise.
The next objection of the appellant was that this point should not have been allowed to be raised and no evidence should have been permitted to be adduced on this point in the absence of the lessor as a party to the suit.
We do not think that there is any force in this objection.
The Court had to decide whether it was a case where relief by way of specific performance should be given.
The Court could not force the defendant to apply to the lessor for his consent nor could the Court force the lessor to give his consent and, if the matter only depended on the consent, the Court would not have ordinarily, in those circumstances, directed the agreement for assignment to be specifically enforced.
The Court, therefore, had also to consider, for the purposes of this case, as to whether the circumstances were such as would indicate that the defendant had been relieved of the burden of his covenant by reason of the lessor having unrea sonably withheld his consent.
It is true that a decision on that question in this suit would not be binding on the lessor, but nevertheless the Court had to come to a decision on that question for the purposes of this suit as between the parties thereto in order to award the relief of specific performance to the plaintiff.
The third objection of the appellant is that the appeal Court should not have allowed the plaintiff to adduce fur ther evidence.
It will be recalled that the appeal Court directed the evidence of the Maharaja of Cossimbazar to be taken during the hearing of the appeal.
The judgment of the appeal Court clearly indicates that it was the appeal Court that "required" the evidence "in order to clear up the matter" and 109 850 "for the purpose of enabling it to come to a proper decision on this point ".
The matter, therefore, is fully covered by Order XLI, rule 27 of the Code of Civil Procedure and no objection can be taken to the course adopted by the appeal Court on that ground.
We do not think there is any reason to interfere in the exercise of the Court 's discretion.
The fourth objection is that the High Court was wrong in holding that the term in the agreement that the defendant must obtain the consent of the lessor before executing the assignment to the plaintiff was a term for the benefit of the plaintiff only.
It will be recalled that that was a term which was introduced by the plaintiff in his offer that eventually ripened into an agreement.
The term was not expressed in a manner indicating that it was inserted in the agreement for the protection of the defendant.
In other words, the objection that the consent of the lessor had not been obtained was one which could be availed of by the plaintiff who could rescind the contract and claim damages for the breach thereof.
We cannot see how, in view of the language used in the correspondence, the defendant could plead the absence of the lessor 's consent as relieving him from the obligation of performing his part of the agreement if the plaintiff waived the objection and insisted on his carrying out the agreement.
The absence of consent may amount to a defect in the title of the defendant, but which the plaintiff was willing to accept.
Finally it is said that by directing the specific per formance of the agreement the Court has exposed the defend ant to the risk of an action for damages for breach of covenant.
If the assignment of the lease by the defendant to the plaintiff without the lessor 's consent amounted to a breach of covenant, the lessor could forfeit the lease and sue for possession.
Such a course would affect only the plaintiff but not the defendant, for he had already parted with the lease for valuable consideration.
It is said that the lessor could sue the defendant for damages for breach of that 851 covenant and the Court should not, by decreeing specific performance, have put the defendant in that perilous posi tion, There appear to us to be two answers to this argu ment, namely, (1) that the defendant should have, by proper language, made his obligation to transfer dependent or conditional upon his being able to obtain the lessor 's consent which he did not do and (2) that the plaintiff being a respectable and responsible person of means, the measure of damages could only be a problematic conjecture.
Indeed, it may have been precisely for this very consideration that the defendant had unconditionally agreed to obtain the consent of the lessor and to assign his interest in the lease.
That the plaintiff was a respectable and responsible person cannot, on the evidence before the Court, be denied or disputed and, indeed, learned counsel for the appellant did not so contend.
We find ourselves in agreement with the High Court that in the circumstances and on the evidence on record the lessor had unreasonably withheld his consent so as to enable the defendant to assign the lease without such consent.
In the circumstances, we are satisfied that both the trial Court and the appeal Court exercised their discre tion properly and no ground has been made out for our inter fering with the judgment of the High Court.
The appeal is accordingly dismissed.
The appellant to pay the costs of this appeal.
Appeal dismissed.
| The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ".
After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant.
The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with.
out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
|
No. 59 of1951.
Appeal from the Judgment and Decree dated the 22nd August, 1944, of the High Court of Judicature at Allahabad (Verma and Hamilton JJ.) in First Appeal No. 345 of 1940 arising out of the Judgment and Decree dated the 24th August, 1940, of the Court of the Special Judge, 1st Grade of Shahjahanpur in Miscellaneous Case No. 52 of 1940 and Original Suit No. 2 of 1938.
Chaudhry Niamutullah (Gopalji Mehrotra, with him) for the appellant.
Onkar Nath Srivastava for respondent No. 5. 1953.
October 8.
507 MAHAJAN J.
This appeal is before us on a certificate granted by the High Court of Judicature at Allahabad under section 110 of the Code of Civil Procedure and the only point it raises is whether the appeal preferred by the appellant to the High Court was imperfectly constituted, inasmuch as all the creditors were not impleaded as parties to that appeal.
The facts are that on the 28th October, 1936, Rama Krishna Narain and others submitted an application under section 4 of the U. P. Encumbered Estates Act, 1934, to the sub divisional officer, Tilhar, Shahjahanpur, praying that the provisions of the said Act be applied to them.
This application was eventually transferred by the sub divisional officer to the court of the special judge, first grade, Shahjahanpur.
The landlords on 26th August, 1938, submitted a written statement to the special judge under section 8 of the Act and therein stated inter alia that they had a pro prietary interest to the extent of ten annas share in 52 items of taluqdari villages which formed part of taluka Bharawan.
A notice of this application was published as required by section 11(1) of the Act in the U.P. Gazette dated 13th May, 1939.
On 30th November, 1939, Raja Dev Singh, who subsequently became a ward of the Court of Wards, filed a claim petition under section 11(2) of the Act and alleged therein that he was the proprietor of 6 1/2 pies share in 47 items of property mentioned in schedule (A) of the landlords ' written statement.
This claim was.
disallowed by the special judge by an order dated 24th August, 1940, and it was held that Raja Dev Singh was not the owner of the property claimed by him in his objection petition.
The Deputy Commissioner of Hardoi who is the Court of Wards of Bharawan estate filed an appeal against this decision of the special judge to the High Court.
All the applicant landlords were impleaded as respondents in the appeal along with the Unao Commercial Bank Ltd., one of the creditors who had taken part in the proceedings before the special judge at that stage.
It does not appear from the record that the other creditors had either filed written statements 67 508 under section 10 or had made any allegation that the landlords had secreted any property.
Their names were not mentioned in the memorandum of parties annexed to the memo of costs, and in these circumstances they were not impleaded as respondents in the appeal.
Subsequently the appellant made an application for impleading them as respondents in the appeal and prayed that he be given the benefit of section 5 of the Indian Limitation Act.
This application was rejected, and eventually the appeal was dismissed on the ground that it was.
defective and could not be entertained in the absence of all the creditors as respondents in the appeal.
The, cross objection filed by the Unao Commercial Bank with respect to costs was allowed.
The appellant on 21st November, 1944, filed a petition for leave to appeal to His Majesty in Council.
It was alleged in this application that the valuation of the subject matter of the appeal in the trial court in the High Court and before His Majesty in Council was over Rs. 10,000 and that though in the result the judgment and decree of the High Court affirmed the judgment and decree of the trial court , a substantial question of law affecting not only the parties but of general interest was involved.
The High Court with out deciding whether the appeal raised a substantial question of law granted leave to the appellant under section 110 of the Code of Civil Procedure on the ground that the judgment of the High Court being one of variance, and the value of the subject. matter in dispute in the trial court as well as in the appeal to His Majesty in Council being over Rs. 10,000, the case fulfilled the requirements of that section.
Mr. Srivastava who represented the debtors landlords before us raised a preliminary objection that the certificate under section 110 of the Civil Procedure Code was defective and the appeal was thus incompetent and could not be entertained by us.
He contended that the only variation made by the High Court in the judgment of the trial judge was in respect of costs and such a variation in the matter of costs only did not invoice the decree a decree of variance, and that 509 being.
so, the ground on which the High Court had granted the certificate was erroneous and the certificate being defective this appeal could not be heard.
In our opinion, this contention is without force.
It is no doubt true that costs are not taken into consideration and are treated as extraneous to the subjectmatter of a suit, and variation in the matter of costs does not make the decree of the appellate court a decree of variance; but as already stated, the appellant did not pray for the certificate on that ground.
He had expressly alleged that the decree being one of affirmance he was entitled to a certificate, because the subject of the suit as well as of the appeal was a sum of orver Rs. 10,000 and the case involveda4 substantial question of law.
It is obvious that the ground on which the appeal was dismissed by the High Court raises a question of law of importance to the parties and that being so, on that ground alone the appellant was entitled to a certificate under section I 10, Civil Procedure Code.
The certificate therefore is good, though the around on which it was granted is erroneous.
It is always open to an appellant to support the certificate on grounds other than those, on which it has been actually ordered to be given.
The preliminary objection therefore fails.
In order to determine whether the creditors are necessary parties in proceedings under chapters 3 and 4 of the U.P.
Encumbered Estates Act, 1934, it is necessary to refer to the relevant provisions of the Act.
The law was enacted for giving relief to encumbered estates in U. P. Section 4 provides that any landlord, who is subject to or whose immoveable property or any part thereof is encumbered with private debts, may make an application in writing to the Collector of the district, stating the amount of such private debts and also of his public debts both decreed and undecreed and requesting that the provisions of this Act be applied to him.
The section gives an option to the landlord who is subject to private debts to make an application for obtaining relief under the provisions of the Act.
The Collector then transmits the application to the special judge appointed under the Act.
510 The direct consequence of the acceptance of such an application by the collector is that the creditors are deprived of their rights of proceeding against such a landlord in civil or revenue courts in respect of their debts and all attachments made in execution of decrees become null and void and no process in execution can issue after that date.
The provisions of the Act are clearly detrimental to the contractual rights of the creditors and to their remedies in civil law and such a statute can by no stretch of imagination be described to have been enacted for the benefit of creditors.
Section 8 of the Act confers power on the special judge of calling upon the applicant to submit to him within a period to be fixed by him in this behalf, a written statement containing full particulars respecting the public and private debts to which he is subject or with which his immoveable property is encumbered; of the nature and extent of his proprietary rights in land; of the nature and extent of his property which is liable to attachment and sale; and lastly, of the names and addresses of the creditors, so far as can be ascertained by him.
If the applicant fails to submit a written statement as called for or furnish the information referred to in the proviso to sub section (2), the special judge is empowered to dismiss the application.
The landlord is not required to implead any creditors as party respondents in his written statement, but he has to furnish information, regarding the names and addresses of his creditors so far as they are known to or can be ascertained by him and his failure to give information may result in a dismissal of the application.
Section 9 requires the special judge to publish in the official gazette a notice in English calling upon all persons having claims in respect of private debts both decreed and undecreed against the person or the property of the landlord to present to the special judge within three months from the date of the publication of the notice, a written statement of their claims.
He is also required to cause copies of such notice to be published in such paper or papers as he may direct and to exhibit it at his own office, at the office of the collector and at some 511 conspicuous place where the landlord resides.
He is further directed to send a copy of the notice and a copy of the written statement under sub section (1) of section 8 by registered post to each of the creditors whose names and addresses are mentioned in the statement under clause,(d) of sub section (1) of section 8.
Section 10 provides that every claimant referred to in section 9 shall in the written statement of his claim give full particulars thereof and shall state so far as they are known to or can be ascertained by him, the nature and extent of the landlord 's proprietary rights in the land and the nature and extent of the landlord 's property other than proprietary rights in land.
The provisions of this section not only require a creditor to give particulars of his own debt but also give him opportunity to contend that the landlord has secreted some property.
Section 11 (1) of the AA directs the special judge to publish a notice specifying the property mentioned by the applicant under section 8 or by any claimant under section 10.
The object of the provisions made in section 11 (1) is to find out the extent of the property that can be utilized to wards liquidation of the debts ascertained under the subsequent provisions of the Act.
Section 11 (2) provides as follows: Any person having any claim to the property mentioned in such notice shall, within a period of three months, from the date of the publication of the notice in the official gazette make an application to the special judge stating his claim and the special judge shall determine whether the property specified in the claim, or any part thereof is liable to attachment sale or mortgage in satisfaction of the debts of the applicant.
" Sub section (3) directs the special judge to determine such claims before he proceeds to determine the amount due to any creditor under section 14.
He is further directed not to pass any decree under section 14 until the expiry of a period of one month from the last day on which he determines a claim under section 11.
Sub section (4) off section 11 provides that any order passed by the special judge under this section shall be 512 deemed to be a decree of a civil court of competent jurisdiction.
Section 13 enacts that every claim, decreed or undecreed against the landlord shall, unless made within the time prescribed be deemed for ;III purposes and on all occasions to have been duly discharged.
Section 14 lays down the procedure for determination of the amount of debts.
The judge is directed to give notice of the date of enquiring into the claims of the creditors to the different claimants and to the person who has made the application under ,section 4.
He is directed to examine each claim after hearing all such parties as desire to be heard and after considering the evidence, if any, produced by them.
The section lays down them mode of calculating interest on the amount of such claims and provides for the application of the provisions of the Usurious Loans Act to the proceedings under the Act.
Sub section (7), provides as follows: "If the special judge finds that any amount is due to the claimant be shall pass a simple money decree for such amount together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in section 27 and if he finds that no amount is due, he may pass a decree for costs in favour of the landlord.
Such decree shall be deemed to be a decree of a ' civil court of competent jurisdiction but no decree against the landlord shall be executable within the United Provinces except under the provisions of this Act.
" Section 18 provides that subject to the right of appeal or revision, the effect of a decree of the special judge under sub section (7) of section 14 shall be to extinguish the previously existing rights, if any, of the claimant, together with all rights, if any, of mortgage or lien by which the same are secured and, where any decree is given by the special judge to substitute for those rights a right to recover the amount of the decree in the manner and to the extent specified in the Act.
Section 45 provides for appeals and revisions against orders and decrees of the special judge.
513 It is apparent from the provisions of the Act cited above that the U.P.
Encumbered Estates Act is no more, nor less than, a code for the administration of the assets of the landlord debtor and for giving relief to him in a number of ways against the contractual rights of his creditors.
It clearly deprives the creditors of any remedies that they would ordinarily have in ordinary civil courts and extinguishes the mortgages held by them.
Sectional(2) deals with claims of third parties to the property alleged by the landlord as belonging to him and the judge is required to determine whether such property is liable to attachment or sale.
It is noteworthy that under section 14(1) the special judge is directed to follow a certain procedure, but no such procedure is prescribed under section 1 1(2).
In section 14 he is required to fix a date and to give notice of the date of inquiring into the claims of the creditors to all the claimants.
There is no such parallel requirement in respect of claims of third parties under section 11(2), though as a matter of practice similar procedure is also followed in an enquiry under this section.
The question that requires consideration in these circumstances is whether the rules of the first schedule to the Code of Civil Procedure should be rigorously applied to proceedings under the Encumbered Estates Act, and whether the creditors who are no doubt ' .persons interested in those proceedings and who would ultimately be entitled to recover their decretal debts from the property the extent of which falls for determination in an enquiry under section II, are necessary parties in the enquiry, or are merely proper parties thereto and as such entitled only to notice of the proceedings.
Order 1, Rules I and 3 of the Code of Civil Procedure, provide in regard to the persons who are to be joined as plaintiffs or those who have to be joined as defendants in suits.
Rule 1 is in these terms: "All persons may be joined in one suit as plaintiff, in whom any right to relief in respect of or arising of the same act or transaction or series of act transactions is alleged to exist, whether 514 severally or in the alternative, where, if such persons brought separate suits, any common question of law or fact would arise." Rule 3 provides: " All persons may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought aaainst such persons any common question of law or fact would arise.
" It is apparent that strictly speaking the provisions of these rules cannot be applied to the proceedings contemplated by the U. P. Encumbered Estates Act.
These proceedings cannot be.
described as suits.
It was conceded at the Bar that an inquiry into third party claims under section 11(2) cannot be described as a suit.
Neither section 8 nor section 1 1 provides that the creditors have to be impleaded as parties respondents in such an objection application.
As already said, the section provides that the applicant has to give information about the names of the creditors and the amounts due to them.
Till the time that a decree is passed under section 14 in favour of any of the creditors it cannot be, said that any one of them is entitled to share in the property of the debtor.
It is only when a claim has been made under section 10 by a creditor and it has ripened into a decree that he is entitled to share in the assets of the landlord.
But if he commits a default in submitting a written statement of the claim under section 10, the claim stands discharged under section 13.
In this particular case it is not clear whether any of the creditors except the Unao Commercial Bank had made a claim under section 10.
It is also not clear whether any decree under section 14 has been passed in favour of any of the creditors.
An inquiry for the determination of the quantum of the debts of the landlord can only be made after third party claims have been settled under the provisions of section 11(2).
In view of these provisions it seems difficult to hold that the technical and 515 strict rules as to impleading of parties can have appli cation to proceedings under section 11 of the U.P.
Encumbered Estates Act.
It is true that the creditors must be given notice and opportunity to say whether the landlord has secreted any property, but if they do not do so and are content with the disclosures made by the landlord they cannot be said to have any further interest in the quantum of the property which the landlord has mentioned under the provisions of section 8 in his written statement.
In that situation, if a third party claims any item of property mentioned by the landlord in the written statement, the controversy at that stage lies only between the landlord and the claimant, though in the result the creditors may either be benefited or deprived of some of the 'assets which the landlord discloses in the application as liable to attachment and sale towards payment of decrees that may be passed in favour of the creditors.
It can well be assumed that the fight at that stage being a bona fide fight between the objector and the landlord, the interests of the creditors will be fully represented by the landlord and any decision obtained in his favour or against him would be binding on all the creditors on the principles enacted in explanation 6 to section I 1, Civil Procedure Code.
If, therefore, in such a contest the claimant loses and the landlord succeeds, then in an appeal against that decision he need only implead the landlord as a party respondent and it is not necessary to implead all the creditors as respondents merely on the ground that ultimately they would be affected by the result, either to their benefit or to their detriment.
The court has power, if it considers that the presence of the creditors is necessary at the hearing, to give them notice of the appeal so that they may have the opportunity of placing their con tentions before it.
The observance of such a procedure may well conduce to a fair hearing of the appeal, even if the creditors have raised no plea of any kind before the special judge.
In a case, however, where the creditors raise a plea that the landlord has secreted certain property and it should be included in the schedule and such property is then claimed by a third 516 party, they may well be regarded as real parties to the controversy and failure to implead them may result in the appeal being imperfectly constituted.
In the situation that arises in the present case the appeal should have been held to be properly constituted because all those who raised any controversy whatsoever as to the ownership of the property in dispute were impleaded.
We are fully conscious of the fact that the view that we have expressed above is not in conformity with a number of decisions of the Oudh Chief Court and the Allahabad High Court.
It is therefore necessary to examine those decisions in order to see whether the reasons given therein are sound or erroneous.
In Rameshwar vs Ajodhia Prasad(1) a Bench of the Oudh Court held that all the creditors who were impleaded as parties to the application under the Act are necessary parties to an appeal by the objector against an adverse order passed against him under section 11.
This judgment proceeds on the assumption that all the creditors having been impleaded as parties to the application and not having been made respondents in the appeal, the appeal became imperfectly constituted.
In this case the question whether under the provisions of the Encumbered Estates Act an applicant is required to implead creditors as parties to the application was neither argued nor considered; on the other hand, it was assumed that all the creditors have to be impleaded as parties in the application made by the claimants under the Act.
That assumption is, of course, erroneous.
Under section 4 the applicant is entitled to request the collector, that the provisions of the Act be applied to him and relief given to him under its provisions.
He is not required even to give information about the names and addresses of creditors and no question of impleading anyone as a respondent arises at that stage.
When the collector has forwarded this application to the special judge, then the special judge is empowered to call upon the applicant to file a written statement and therein he is bound %to give information About the (1) A.I.R. 1941 Oudh 580, 517 names and addresses of his creditors so far as they are known to him or can be ascertained by him.
In the written statement which he is called upon to file on a requisition by the special judge he is not called upon to implead any persons as parties, in the sense in which that term is used in the Code of Civil Procedure.
This decision therefore is not of any help on the point that was argued before us.
In Chaudhri Bishunath Prasad vs Sarju Saran Tewari(1), another Bench of the Oudh Court held that an enquiry into the indebtedness of the landlord is to be carried out by the special judge in the presence of all the creditors, that though it is true that each creditor is interested in establishing his own debt against the landlord, he is further interested that the landlord should not be allowed to withhold any property from the court, and that if 'a claimant under section I I sets up a title to the property shown by the landlord to belong to him, although the real contest may for the time being be between the claimant on the one hand and the landlord on the other hand, it is to the ultimate interest of the entire body of the creditors that the property should be held to belong to the landlord, and if the decision is in favour of the landlord, all the creditors will be entitled to have their debts satisfied out of such property; but if, however, the decision is against them, the property will go out of the reach of the creditors and will not be available to them for the satisfaction of their debts.
It was further held that as all.
the creditors had not been joined as parties to the appeal and as they were interested in the result of the appeal, it could not be held that they were wholly unconcerned in the result of the case and therefore the appeal was not maintainable.
It seems to us that in making these observations the learned Judges did not clearly bear in mind the distinctions between the provisions of sections 11 and 14 of the Act.
Section 14 lays down a definite procedure so far as the enquiry into the claims of creditors is concerned .
Each creditor has to establish his claim against the landlord as he (1) A.I.R. 1942 Oudh 16.
518 would do if he had filed a suit against him.
This enquiry is made after the quantum of the property of the debtor has been ascertained under section 11.
As already pointed out, if any creditor raises any dispute as to the quantum of the property as he is entitled to raise such a dispute in his written statement filed under section 10, in that situation it may well be held that such a creditor is directly interested in the enquiry under section 11 ; but it is difficult to see that all other creditors who have accepted the list of property filed by the debtor as true are directly interested in the enquiry under that section and are as such necessary parties and that without impleading them the enquiry cannot proceed.
Rules I and 3 of Schedule I Of the Code of Civil Procedure do not lay down that every person who is ultimately interested in the result of a suit should be impleaded as a defendant.
All that these rules insist upon is that all persons should be joined as defendants against whom any right to relief is alleged to exist, provided that such right arises in respect of the same act or transaction or series of acts or transactions and the case is one where common question of law or fact would arise.
It is not possible to hold that the objector can claim any right to relief against the creditors as such.
The right to relief in the enquiry under section 11 is only against the landlord who alleges himself to be the owner of the property which the claimant says belongs to him, and creditors have no right of interest in the property claimed by the objector.
The test of ultimate benefit therefore laid down by the Oudh Court for holding that all creditors are necessary parties in the enquiry under section 11 of the U.P.
Encumbered Estates Act does not fulfil the conditions laid down in the Code for impleading parties as plaintiffs or as defendants.
If they are not necessary parties in the true sense of the term in the enquiry under section 11, a fortiori failure to implead them as respondents in the appeal detective.
In Lakshmi Narain vs Satgurnath(1) another Bench of the Oudh Court took the ' same view.
In this case.
(1) A.I.R. 1942 Oudh 339.
519 the earlier decisions of the Oudh Court were followed The view was reiterated that creditors are parties in the proceedings under the Encumbered Estates Act.
In Benares Bank Ltd., Benares vs Bhagwandas (1), a Full Bench of the Allahabad High Court considered this question and expressed the same opinion as had been expressed in the Oudh decisions referred to above.
Mr. Justice Braund, who was one of the Judges constituting the Full Bench, with great reluctance shared the opinion of the majority merely out of respect for the opinion of Pathak J. and it appears that, left to himself, he would have held otherwise.
The majority judgment was delivered by Pathak J. He enunciated two tests for deciding whether a certain person was a necessary party in a proceeding: (1) that there must be a right to some relief against such party in respect of the matter involved in the proceedings in question, and (2) it should not be possible to pass an effective decree in the absence of such party, and proceeded to observe that the creditors of a landlord who have claimed relief under the Encumbered Estates Act are necessary parties to the proceedings under that Act and that the object of the Act is to compel the landlord to surrender his entire property for the benefit of his creditors and to liquidate the debts of all the creditors in accordance with and to the extent per mitted by the Act.
There can be no question that these are the true tests for determining whether a person is a necessary party to certain proceedings but the question is whether judged on these tests the creditors of a landlord under the U. P.
Encumbered Estates Act can be said to be necessary parties in an enquiry under section 11.
It seems to us that in the first instance it is an incorrect assumption to make that the object of the Act is to grant relief to the creditors of a landlord; it is quite the converse.
The object of the Act is to grant relief to the landlord whose estate is encumbered with debts, by scaling, down the debts and by depriving the creditors of their (1) A.I.R. 1947 All. 18.
520 civil remedies.
The creditors are allowed to prove their debts and obtain decrees from the special judge according to the provisions of and to the extent allowed by the Act and they lose all their rights on securities held by them.
Coming to the application of the tests laid down by the learned Judge, it is not possible to hold that any right of relief exists in an objector under section 11 as against the creditors.
It is also difficult to see how an effective decree cannot be passed as regards title to the property in the absence of creditors.
One test of the effectiveness of a decree is whether that decree can be executed without the presence of creditors as regards property decreed in favour of a claimant.
It is obvious that in execution proceedings a warrant of attachment and for delivery of possession can only be issued against the owner, viz., the landlord, and not against the creditors.
In these proceedings the special judge can give no relief to the objector against the creditors.
So on the tests mentioned by the learned Judge it is clear that the creditors of a debtor are not necessary parties in these administrative proceedings under the Encumbered Estates Act, though they may be given notice of those proceedings and afforded opportunity to watch those proceedings in order to see that no property is secreted from them and it is preserved for satisfaction of decrees that may eventually be passed in their favour.
In his judgment Pathak J. proceeded to observe that though the landlord is a, party to the dispute under section 11, it is obvious that the main party who is vitally interested in that dispute is the entire body of creditors, because the issue that arises out of such a claim is whether the property which is the subject matter of the claim is liable for the satisfaction of the debts due to the entire body of creditors.
This statement also, in our opinion is not very precise.
It is not correct to say that the result of a decision,in such a claim makes the property liable for satisfaction of debts due to the entire body of creditors who had made claims at that stage.
The property is only 521 liable for satisfaction of decrees that may be passed subsequently under section 14.
It may well be that of the persons who have been disclosed as creditor under section 8, a number of them may not at all be interested in the result of the decision of the claim under section II.
It is an overstatement to make that the main party who is vitally interested in the dispute is the entire body of creditors '.
The dispute relates to title to property and according to all principles of impleading of parties it is not the eventual benefit that a person may derive from a certain decision that is the crucial test in deciding whether a party is a necessary party or merely a proper party.
Pathak J. proceeded to observe as follows : "Could it be suggested that in a suit under Order XXI, rule 63, Civil Procedure Code, the decree holders who desire to seize the property belonging to the judgment debtor are not necessary parties?" With great respect again, this analogy is not very happy or apposite.
Under Order XXI, rule 63, it is only the attaching creditor who has the right to file a suit or of being impleaded as defendant in a suit by the judgment debtor.
AR the creditors of the judgment debtor who have not attached the property are not necessary parties in a suit under Order XXI, rule 63, though after the decision in that suit they may be entitled to share in the rateable distribution of the property if they make an application for that purpose.
In a way it is true to say that in all suits by a creditor against a debtor where the debtor owes to a number of creditors, every other creditor is interested in seeing that that creditor 's suit is dismissed or his debt is considerably cut down; but from that it does not follow that in a suit on a promissory note by a creditor against the debtor all the other creditors are necessary parties.
The eventual interest of a party in the fruits of a litigation cannot be hold to be the true test of impleading parties under the Code of Civil Procedure and it is rather difficult to hold that where that is not the true test under the Code, that should be adopted as A test in proceedings of an administrative 522 character under the U. P.
Encumbered Estates Act.
it cannot be forgotten that under the provisions of section 11 no provision has been made for issuing notice to all the creditors.
Reference may also be made to rule 6 framed under the Encumbered Estates Act.
This rule provides that the proceedings under this Act shall be governed by the Code of Civil Procedure so far as they are applicable.
As already pointed out, the provisions of Order 1, rules 1 and 3, cannot aptly be held applicable in such proceedings.
We cannot uphold the view of Pathak J. that all creditors become parties to the proceedings under the Act in the technical sense of the term after a notice has been served upon them and in any event after they have filed the written statements, that they continue to remain ' as parties until the debts are liquidated or proceedings terminated in accordance with the provisions of the Act.
This seems to be too wide a statement of the law on the point.
Can it be said that after each individual creditor obtains a decree in respect of his claim under section 14, each one of these creditors has to be impleaded as a party in an appeal preferred by that creditor or by the debtor.
It is not possible to give an answer in the affirmative to such proposition.
no hesitation in saying that though he ultimately abondoned n thinking that in.
We have therefore Mr. Justice Braund, his view, was right administrative proceedings technical rules of the First Schedule of the Code of Civil Procedure regarding impleading of parties should not be invoked and that the matter should be viewed in a more liberal way, regard always being had to the fact that there is no collusion between the debtor and the claimant and that there are persons who are bona fide litigating in respect of the title of the claimant under section 11, and if there has been such a bona fide fight which results in a decree in an appeal against that decree it is sufficient that those who took an active part in the proceedings under section II are impleaded.
It is not necessary to implead each and every creditor who either did pot appear or put forward a written statement under 523 section 10 or took no active part in the proceedings under section 11(2).
In the view that we have taken it is not necessary to decide the question whether the High Court was right in not exercising its powers under Order XLI, rule 20, in impleading the creditors as respondents to the appeal.
For the reasons given above we allow this appeal, set aside the judgment of the High Court and remand the case to that court for hearing the appeal in accordance with law on its merits.
If the High Court thinks fit that the presence of any creditors would help the court in arriving at a true decision of the matter it in its discretion may give notice to the creditors of the date of hearing, We leave the parties to bear their own costs of this appeal.
Appeal allowed.
Agent for respondent No. 5: section section Shukla.
| Creditors who did not take an active part in the proceedings are not necessary parties to an appeal from an order rejecting a claim made in a proceeding under section 11 (2) of the U. P. Encumbered Estates Act, 1934.
The technical rules of the Civil Procedure Code regarding the impleading of parties should not be applied to such proceedings.
The matter should be viewed in a more liberal way, regard being always had to the fact that there is no collusion between the debtor and the claimant.
I Rameshwar vs Ajodhia Prasad (A.I.R. 1941 Oudh 580), Chaudhri Bishuanth Prasad vs Sarju Saran Tewar (A.I.R. 1942 Oudh 16), Lakshmi Narain vs Satgurnath (A.I.R. 1942 Oudh 339) and Benares Bank Ltd. vs Bhagwandas (A.I.R. 1947 All. 18) overruled.
|
Appeal No. 80 of 1952.
Appeal from the Judgment and Decree dated the 6th September, 1950, of the High Court of Judicature at Calcutta (Das Gupta and Lahiri JJ.) in Appellate Decree No. 318 of 1949 from the Judgment and Decree dated the 25th February, 1949.
of the Court of the District Judge of Zillah 24 Parganas in Title Appeal No. 8 of 1948 arising out of the Judgment and Decree dated the 10th October, 1947, of the Court of the Additional Subordinate Judge, 7th Court, Alipore.
M.C. Setalvad, Attorney General for India (Aurobindo Guha and Gobinda Mohan Roy, with him) for the appellant.
Atul Chandra Gupta (Bijan Behari Das Gupta, with him) for respondent No. 1 1953.
November 16.
The Judgment of the Court was delivered by MUKHERJEA J.
The facts giving rise to this appeal are, for the most part, uncontroverted and the dispute between the parties centres round the short point as to whether a contract for sale of land to which this litigation relates, was discharged and came to an end by reason of certain supervening circumstances which affected the performance of a material part of it.
To appreciate the merits of controversy, it will be necessary to give a brief narrative of the material facts.
The defendant company, which is the main respondent in this appeal, is the owner of a large tract of land situated, in the vicinity of the Dhakuria Lakes within Greater Calcutta.
The 313 company started a scheme for development of this land for residential purposes which was described as Lake Colony Scheme No. I and in furtherance of the scheme the entire area was divided into a large number of plots for the sale of which offers were invited from intending purchasers.
The company 's plan of work seemed to be, to enter into agree ments with different purchasers for sale of these plots of land and accept from them only a small portion of the con sideration money by way of earnest at the time of the agree ment.
The company undertook to construct the roads and, drains necessary for making the lands suitable for building and residential purposes and as soon as they were completed.
the purchaser would be called upon to complete the con veyance by payment of the balance of the consideration money.
Bejoy Krishna Roy, who was defendant No. 2 in the suit and figures as a pro forma respondent in this appeal, was one of such purchasers who entered into a contract with the company for purchase of a plot of land covered by the scheme.
His contract is dated the 5th of August, 1940, and he paid Rs. 101 as earnest money.
In the receipt granted by the vendor for this earnest money, the terms of the agree ment are thus set out: "Received with thanks from Babu Bejoy Krishna Roy of 28 Tollygunge Circular Road, Tollygunge, the sum of Rs. 101 (Rupees one hundred and one only) as earnest money having agreed to sell to him or his nominee 5 K. more or less in plot No. 76 on 20 and 30 ft.
Road in Premises No. Lake Colony Scheme No. 1, Southern Block at the average rate of Rs. 1,000 (Rupees one thousand only) per Cotta.
The conveyance must be completed within one month from the date of completion of roads on payment of the balance of the consideration money, time being deemed as the Essence of the Contract.
In case of default this agreement will be considered as cancelled with forfeiture of earnest money.
Mokarari Mourashi 314 Terms of payment:One third to be paid at the time of registration and the balance within six years bearing Rs. 6 per cent.
interest per annum".
On 30th November, 1941, the plaintiff appellant was made a nominee by the purchaser for purposes of the contract and although he brought the present suit in the character of a nominee, it has been held by the trial judge as well as by the lower appellate court, that he was really an assignee of Bejoy Krishna Roy in respect to the latter 's rights under the contract.
Some time before this date, there was an order passed by the Collector, 24 Parganas, on 12th of November, 1941 under section 79 of the Defence of India Rules, on the strength of which a portion of the land covered by the scheme was requisitioned for military purposes.
Another part of the land was requisitioned by the Government on 20th of December, 1941.
while a third order of requisition, which related to the balance of the land comprised in the scheme, was passed sometime later.
In November, 1943, the company addressed a letter to Bejoy Krishna Roy informing him of the requisitioning of the lands by the Government and stating inter alia that a considerable portion of the land appertaining to the scheme was taken possession of by the Government and there was no knowing how long the Government would retain possession of the same.
The constructs of the proposed roads and drains, therefore, could not be taken up during the continuance of the war and possibly for many years after its termination.
In these circumstances,, the company decided to treat the agreement for sale with the addressee as cancelled and give him the option of taking back the earnest money within one month from the receipt of the letter.
There was offer made in the alternative that in case the purchaser refused to treat the contract as cancelled, he could, if he liked, complete the conveyance within one month from the receipt of the letter by paying the balance of the consideration money and take the land in the condition in which it existed at that time, the company undertaking to construct the roads and the drains, as circumstances might permit, after the termination of the war.
315 The letter ended by saying that in the event of the addressee not accepting either of the two alternatives, the agreement would be deemed to be cancelled and the earnest money would stand forfeited.
This letter was handed over by Bejoy Krishna to his nominee, the plaintiff, and there was some correspondence after that, between the plaintiff on the one hand and the company on the other through their respective lawyers into the details of which it is not necessary to enter.
It is enough to state that the plaintiff refused to accept either of the two alternatives offered by the company and stated categorically that the latter was bound by the terms of the agreement from which it could not, in law, resile.
On 18th of January, 1946, the suit, out of which this appeal arises, was commenced by the plaintiff against the defendant company, to which Bejoy Krishna Roy was made a party defendant and the prayers in the plaint were for a two fold declaration, namely, (1) that the contract dated the 5th of August, 1940, between the first and the second defendant, or rather his nominee, the plaintiff, was still subsisting; and (2) that the plaintiff was entitled to get a conveyance executed and registered by the defendant on payment of the consideration money mentioned in the agreement and in the manner and under the conditions specified therein.
The suit was resisted by the defendant company who raised a large number of defences in answer to the plaintiff 's claim, most of which are not relevant for our present purpose.
The principal contentions raised on behalf of the defendant were that a suit of this description was not maintainable under section 42 of the Specific Relief Act and that the plaintiff had no locus standi to institute the suit.
The most material plea was that the contract of sale stood discharged by frustration as it became impossible by reason of the supervening events to perform a material part of it.
Bejoy Krishna Roy did not file any written statement and he was examined by the plaintiff as a witness on his behalf.
316 The trial judge by his judgment dated 10th October, 1.947, overruled all the pleas taken by the defendant and decreed the plaintiff 's suit.
An appeal taken by the defendant to the Court of the District Judge of 24 Parganas was dismissed on the 25th February, 1949, and the judgment of the trial court was affirmed.
The defendant company thereupon preferred a second appeal to the High Court which was heard by a Division Bench consisting 'of Das Gupta and Lahiri JJ.
The only question canvassed before the High Court was, whether the contract of sale was frustrated by reason of the requisition orders issued by the Government? The learned Judges answered this question in the affirmative in favour of the defendant and on that ground alone dismissed the plaintiff 's suit.
The plaintiff has now come before us on the strength of a certificate granted by the High Court under article 133(I)(c) of the Constitution of India.
The learned Attorney General, who appeared in support of the appeal, has put forward a three fold contention on behalf of his client.
He has contended in the first place that the doctrine of English law relating to frustration of contract, upon which the learned Judges of the High Court based their Decision has no application to India in view of the statutory provision contained in section 56 of the Indian Contract Act.
it is argued in the second place, that even if the English law Applies, it can have no application to contracts for sale of land and that is in fact the opinion expressed by the English ,judges themselves.
His third and the last argument is that on the admitted faacts and circumstances of this case there was no frustrating event which could be said to have taken away the basis of the contract or tendered its performance impossible in any sense of the word.
The first argument advanced by the learned AttorneyGeneral raises a somewhat debatable point regarding the true scope and effect of section 56 of the Indian Contract Act and to what extent, if any, it incorporates the English rule of frustration of contracts.
317 Section 56 occurs in Chapter IV of the Indian Contract Act which relates to performance of contracts and it purports to deal with one circumstances under which performance of a, contract is excused or dispensed with on the ground of the contract being void.
The section stands as follows: "An agreement to do an act impossible in itself is void.
A contract to do an act which after the contract is made, becomes impossible, or, by reason of some event which the promiser could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promise sustains through the non performance of the promise".
The first_paragraph of the section lays down the law in the same way as in England.
It speaks of something which is impossible inherently or by its very nature, and no one can obviously be directed to an act.
The second paragraph enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done.
The wording of this paragraph is quite general, and though the illustrations attached to it are not at all happy, they cannotderogate from the general words used in the enactment.
This much is clear that the word "impossible" has not been used here in the sense of physical or literal impossibility.
The performance of an act may not be literally impossible but it may be impracticbale and useless from the point of view of the object and purpose which the parties had in view and if an untoward event or change of circumstances totally upset the very foundation upon which the parties rested their bargain, it can very well be said that the promisor L/B(D)2SCI 6(a) 318 found it impossible to do the act which he promised to do.
Although various theories have been propounded by the Judges and jurists in England regarding the juridical basis of the doctrine of frustration, yet the essential idea upon which the doctrine is based is that of impossibility of performance of the contract: in fact impossibility and frustration are often used as interchangeable expressions.
The changed circumstances, it is said, make the performance of the contract impossible and the parties are absolved from the further performance of it as they did not promise to perform an impossibility The parties shall be excused, as Lord Loreburn says(1), "if substantially the whole contract becomes impossible of performance or in other words impracticable by some cause for which neither was responsible,.
" In Joseph Constantine Steamship Line Limited vs Imperial Smelting Corporation Ltd.(2), Viscount Maugham obseryed that the "doctrine of frustration is only a special case of the discharge of contract by an impossibility of performance arising after the contract was made." Lord Porter agreed with this view and rested the doctrine on the same basis.
The question was considered and discussed by a Division Bench of the Nagpur High Court in Kesari Chand vs Governor General in Council(3) and it was held that the doctrine of frustration comes into play when a contract becomes impossi ble of performance, after it is made, on account of circum stances beyond the control of the parties.
The doctrine is a special case of impossibility and as such comes under section 56 of the Indian Contract Act.
We are in entire agreement with this view which is fortified by a recent pronouncement of this court in Ganga Saran vs Ram Charan(4), where Fazl (1) See Tamplin Steamship Co. Ltd. vs Anglo Mexican Petroleum Products Co. Ltd.[1916] 2 A.C. 397, 403.
(2) at 168.
(3) I.L.R. (4) ; at 52.
319 Ali J., in speaking about frustration, observed in his judgment as follows: "It seems necessary for us to emphasise that so far as the courts in this country are concerned, they must loot primarily to the law as embodied in sections 32 and 56 of the .
" We hold, therefore, that the doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56 of the .
It would be incorrect to say that section 56 of the Contract Act applies only to cases of physical impossibility and that where this section is not applicable, recourse can be had to the principles of English law on the subject of frustration.
It must be held also that to the extent that the deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law dehors these statutory provisions.
The decisions of the English courts possess only a persuasive value and may be helpful in showing how the courts in England have decided cases under circumstances similar to those which have come before our courts.
It seems necessary however to clear up some misconception which is likely to arise because of the complexities of the English law on the subject.
The law of frustration in England developed, as is well known, under the guise of reading implied terms into contracts.
The court implies a term or exception and treats that as part of the contract.
In the case of Taylor vs Caldwell(1), Blackburn J. first formulated the doctrine in its modern form.
The court there was dealing with a case where a music hall in which one of the contracting parties had agreed to give concerts on certain specified days was accidentally burnt by fire.
It was held that such a contract must be regarded "as subject to an implied condition that the parties shall be excused, in case, before breach, performance becomes impossible from perishing of the thing without (1) ; 320 default of.
the contractor.
" Again in Robinson vs Davison(1) there was a contract between the plaintiff and the defendant 's wife (as the agent of her husband) that she should play the piano at a concert to be given by the plaintifl on a specified day.
On the day in question she was unable to perform through illness.
The contract did not contain any term as to what was to be done in case of her being too ill to perform.
In an action against the defendant for breach of contract, it was held that the wife 's illness and the consequent incapacity excused her and that the contract was in its nature not absolute but conditional upon her being well enough to perform.
Bramwell B. pointed out in course of his judgment that in holding that the illness of the defendant incapaciated her from performing the agreement the court was not really engrafting a new term upon an express contract.
It was not that the obligation was absolute in the original agreement and a new condition was subsequently added to it; the whole question was whether the original contract was absolute or conditional and having regard to the terms of the bargain, it must be held to be conditional.
The English law passed through various stages of development since then and the principles enunciated in the various decided authorities cannot be said to be in any way uniform.
In many of the pronouncements of the highest courts in England the doctrine of frustration was held "to be a device by which the rules as to absolute contracts are reconciled with a special exception which justice demands"(2).
The court, it is said, cannot claim to exercise a dispensing power or to modify or alter contracts.
But when an unexpected event or change of circumstance occurs, the possibility of which the parties did not circumstance occurs, the possibility contract is taken to be not what the parties actual intended, but what they as fair and reasonable men would presumably have intended and agreed upon, if having such possibility in view they had made express provsion as to their rights and liabilities in the event of such occurrence(1).
As Loard Wright (1) ; (2) Vide Hirji Mulji vs Cheong Yue Steamship Co. Ltd. at 510.
(3) Vide Dahl vs Nelson, Donkinand Co. (1881) 6 App.
38 at 59.
321 observed in Joseph Constantine Steamship Co. vs Imperial Smelting Corporation Ltd.(1).
"In ascertaining the meaning of the contract and its application to the actual occurrences, the court has to decide, not what the parties actually intended but what as reasonable men they should have intended.
The court personifies for this purpose the reasonable man.
" Lord Wright clarified the position still further in the later case of Denny, Mott and Dickson Ltd. vs James B. Fraser & Co. Ltd.(1), where he made the following observations: "Though it has been constantly said by high authority, including Lord Sumner, that the explanation of the rule is to be found in the theory that it depends on an implied con dition of the contract, that is really no explanation.
It only pushes back the problem a single stage.
It leaves the question what is the reason for implying a term.
Nor can I reconcile that theory with the view that the result does not depend on what the parties might, or would, as hard bargainers, have agreed.
The doctrine is invented by the court in order to supplement the defects of the actual contract.
To my mind the theory of the implied condition is not really consistent with the true theory of frustration.
It has never been acted on by the court as a ground of decision, but is merely stated as a theoretical explanation.
" In the recent case of British Movietonews Ltd. vs London and District Cinemas Ltd.(1), Denning L. J. in the Court of Appeal took the view expressed by Lord Wright as stated above as meaning that "the court really exercises a qualifying power a power to qualify the absolute., literal or wide terms of the contract in order to do what is just and reasonable in the new situation".
"The day is gone," (1) at 185.
(2) ; at 275.
(3) L/ B(D) 2SCI 7 322 the learned Judge went on to say, "when we can excuse an unforeseen injustice by saying to the sufferer 'it is your own folly, you ought not to have passed that form of words.
You ought to have put in a clause to protect yourself '.
We no longer credit a party with the foresight of a Prophet or his lawyer with the draftsmanship of a Chalmers.
We realise that they have their limitations and make allowances accor dingly.
It is better thus.
The old maxim reminds us that he who clings to the letter clings to the dry and barren shell and misses the truth and substance of the matter.
We have of late paid heed to this warning, and we must pay like heed now.
" This decision of the Court of Appeal was reversed by the House of Lords and Viscount Simon in course of his judgment expressed disapproval of the way in which the law was stated by Denning L.J.
It was held that there was no change in the law as a result of which the courts could exercise a wider power in this regard than they used to do previously.
"The principle remains the same", thus observed his Lordship. "Particular applications of it may greatly vary and theoretical lawyers may debate whether the rule should be regarded as arising from implied term or because the basis of the contract no longer exists.
In any view, it is a question of construction as Lord Wright pointed out in Constantine 's case and as has been repeatedly asserted by other masters of law.
"(1) These differences in the way of formulating legal theories really do not concern us so long as we have a statutory provision in the .
In deciding cases in India the only doctrine that we have to go by is that of supervening impossibility or illegality as laid down in section 56 of the Contract Act taking the word "Impossible" in its practical and not literal sense.
It must be borne in mind, however, that section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties.
(1) at 184.
323 In the latest decision of the House of Lords referred to above, the Lord Chancellor puts the whole doctrine upon the principle of construction.
But the question of construction may manifest itself in two totally different ways.
In one class of cases the question may simply be, as to what the parties themselves had actually intended and whether or not there as a condition in the contract itself, express or implied, which operated, according to the agreement of the Parties themselves to release them from their obligations; this would be a question of construction pure and simple and the ordinary rules of construction would have to be applied to find out what the real intention of the parties was.
According to the , a promise may be express or implied(1).
In cases, therefore, where the court gathers as a matter of construction that the contract itself contained impliedly or expressly a term, according to which it would stand discharged on the happening of certain circumstances the dissolution on of the contract would take place under the terms of the contract itself and such cases would be outside the purview of section 56 altogether.
Although in English law these cases are treated as cases of frustration, in India they would be dealt with under section 32 of the which deals with contingent contracts or similar other provisions contained in the Act.
In the large majority of cases however the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract.
The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement.
Here there is no question of finding out an implied term agreed to by the parties em bodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have any intention regarding it.
When such an event or change of (1) Vide section 9.
L/B(D)2SCI 7(a) 324 circumstance occurs which is so fundamental as to be re garded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end.
The court undoubtedly has to examine the contract and the circumstances under which it was made.
The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed cir cumstances destroyed altogether the basis of the adventure and its underlying object(1).
This may be called a rule of construction by English Judges but it is certainly not a, principle of giving effect to the intention of the parties which underlies all rules of construction.
This is really a rule of positive law and as such comes within the purview of section 56 of the .
It must be pointed out here that if the parties do con template the possibility of an intervening circumstance which might affect the performance of the contract, but expressly stipulate that the contract would stand despite such circumstances, there can be no case of frustration because the basis of the contract being to demand performance despite the happening of a particular event, it cannot disappear when that event happens.
As Lord Atkinson said in Matthey vs Curling(1), "a person who expressly contracts absolutely to do a thing not naturally impossible is not excused for nonperformance because of being prevented by the act of God or the King 's enemies. . or vis major".
This being the legal position, a contention in the extreme form that the doctrine of frustration as recognised in English law does no come at all within the purview of section 56 of the cannot be accepted.
The second contention raised by the Attorney General can be disposed of in few words.
It is true that in England the judicial opinion generally expressed is, that the doctrine of frustration does not operate in the case of contracts for (1) Vide Morgan vs Manser (1947] 2 AU E.R. 666.
(2) at 234.
325 sale of land(1).
But the reason underlying this view is that under the English law as soon as there is a concluded contract by A to sell land to B at certain price, B becomes in equity, the owner of the land, subject to his obligation to pay the purchase money '.
On the other hand, A in spite of his having the legal estate holds the same in trust for the purchaser and whatever rights he still retains in the land are referable to his right to recover and receive the purchase money.
The rule of frustration can only put an end to purely contractual obligations, but it cannot destroy an estate in land which has already accrued in favour of a contracting party.
According to the Indian law, which is embodied in section 54 of the Transfer of Property Act, a contract for sale of land does not of itself create any interest in the property which is the subject matter of the contract.
The obligations of the parties to a contract for sale of land are, therefore, the same as in other ordinary contracts and consequendy there is no conceivable reason why the doctrine of frustration should not be applicable to contracts for sale of land in India.
This contention of the Attorney General must, therefore, fail.
We now come to the last and most important point in this case which raises the question as to whether, as a result of the requisition orders, under which the lands comprised in the development scheme of the defendant company were requisitioned by Government, the contract of sale between the defendant company and the plaintiff 's predecessor stood dissolved by frustration or in other words became impossible of performance.
It is well settled and not disputed before us that if and when there is frustration the dissolution of the contract occurs automatically.
It does not depend, as does rescission of a contract on the ground of repudiation or breach, or on the choice or election of either party.
It depends on the effect (1) Vida Billington Estates Co. vs Stonfield Estate Ltd. [1952] 1 All E.R.853.
326 of what has actually happened on the possibility of performing the contrat (1).
What happens generally in such cases and has happened here is that one party claims that the contract has been frustrated while the other party denies it.
The issue has got to be decided by the court "ex post facto, on the actual circumstances of the case"(2).
We will now proceed to examine the nature and terms of the contract before us and the circumstances under which it was entered into to determine whether or not the disturbing element,which is allowed to have happened here, has substantially prevented the performance of the contract as a whole.
It may be stated at the outset that the.
contract before us cannot be looked upon as an ordinary contract for sale and purchase of a piece of land; it is an integral part of a development scheme started by the defendant company and is one of the many contracts that have been entered into by a large number of persons with the company.
The object of the company was undoubtedly to develop a fairly extensive area which was still undeveloped and make it usable for residential purposes by making roads and constructing drains through it.
The purchaser.
on the other hand, wanted the land in regard to which he entered into the contract to be developed and make ready for building purposes before he could be called upon to complete the purchase.
The most material thing which deserves notice is, that there is abso lutely no time limit within which.
the roads and drains are to be made.
The learned District Judge of Alipore, who heard the appeal, from the trial court 's judgment found it as a fact, on the evidence in the record, that there was not an understanding between the parties on this point.
As a matter of fact, the first requisition order was passed nearly 15 months after the contract was made and apparently no work was done by the defendant company in the meantime.
Another important thing that requires notice in this con (1) Per Lord Wright in Denny, Mott and Dicksom Ltd. vs Jameso B. Fraser and Co., Ltd. ; , 274, (2) Ibid.
327 nection is that the war was already on, when the parties entered into the contract.
Requisition orders for taking temporary possession of lands for war purposes were normal events during this period.
Apart from requisition orders there were other difficulties in doing construction work at that time because of the scarcity of materials and the various restrictions which the Government had imposed in respect of them.
That there were certain risks and difficulties involved in carrying on operations like these, could not but be in the contemplation of the parties at the time when they entered into the contract, and that is probably the reason why no definite time limit was mentioned in the contract within which the roads and drains are to be completed.
This was left entirely to the convenience of the company and as at matter of fact the purchaser did not feel concerned about it.
It is against this background that we are to consider to what extent the passing of the requisition orders affected the performance of the contract in the present case.
The company, it must be admitted, bad not commenced the development work when the requisition order was passed in November, 1941.
There was no question, therefore, of any work or service being interrupted for an indefinite period of time.
Undoubtedly the commencement of the work was delayed but was the delay going to be so great and of such a character that it would totally upset the basis of the bargain and comercial object which the parties had in view? The requisition orders, it must be remembered, were ' by their very nature, of a temporary character and the requisitioning authorities could, in law, occupy the position of a licensee in regard to the requisitioned property.
The order might continue during the whole period of the war and even for some time after that or it could have been withdrawn before the war terminated.
If there was a definite time limit agreed to by the parties within which the construction work was to be finished, it could be said with perfect propriety that delay for an indefinite period would 328 make the performance of the contract impossible within the specified time and this would seriously affect the object and purpose of the venture.
But when there is no time limit whatsoever in the contract, nor even an understanding bet ween the parties on that point and when during the war the parties could naturally anticipate restrictions of various kinds which would make the carrying on of these operations more tardy and difficult than in times of peace, we do not think that the order of requisition affected the fundamental basis upon which the agreement rested or struck at the roots of the adventure.
The learned Judges of the High Court in deciding the case against the plaintiff relied entirely on the time factor.
It is true that the parties could not contemplate an absolutely unlimited period of time to fulfil their contract.
They might certainly have in mind a period of time which was reasonable having regard to the nature and magnitude of the work to be done as well as the conditions of war prevailing at that time.
Das Gupta, J., who delivered the judgment of the High Court, says first of all that the company had in contemplation a period of time not much exceeding 2 or 3 years as the time for performance of the contract; the purchaser also had the same period of time in contemplation.
The learned Judge records his finding on the point in the following words: "My conclusion on a consideration of the surrounding circumstances of the contract is that the parties contemplated that the roads and drains would be constructed and the conveyance would be completed in the not distant future.
" This finding is inconclusive and goes contrary to what has been held by the District Judge who was undoubtedly the last court of facts.
In our opinion, having regard to the nature and terms of the contract, the actual existence of war conditions at the time when it was entered into, the extent of the work involved in the development scheme and last though not the least the total absence of any definite period of time agreed to by the parties within which the work was 329 to be completed, it cannot be said that the requisition order vitally affected the contract or made its performance impossible.
Mr. Gupta, who appeared for the respondent company.
put forward an alternative argument that even if the performance of the contract was not made impossible.
it certainly became illegal as a result of the requisition order and con sequently the contract became void under section 56 of the as soon as the requisition order was made.
In support of his contention the learned counsel placed reliance upon certain provisions of the Defence of India Rules and also upon illustration (d) to section 56 of the Contract Act.
All that the Defence Regulations show is that the violation of a requisition order could be punished as a criminal offence.
But no matter in whichever way the requisition order could be enforced, in substance it did nothing else but impose a prohibition on the use of the land during the period that it remained in force.
The effect of such prohibition on the performance of the contract, we have discussed above, and we do not think that the mere fact that the requisition order was capable of being enforced by a criminal sanction made any difference in this respect.
In any view this question was not raised in any of the courts below and has not been indicated even in the respondent 's statement of the case.
We do not think that it would be proper to allow this question to be raised for the first time before us, as it requires consideration of the different provisions of the Defence of India Act and also of the implication of illustration (d) appended to section 56 of the Contract Act.
In our opinion, the events which have happened here cannot be said to have made the performance of the contract impossible and the contract has not been frustrated at all.
The result is that the appeal is allowed, the judgment and decree of the High Court of Calcutta are set aside and those of the courts below restored.
The plaintiff will have his costs in all the courts.
Appeal allowed.
Agent for the respondent No. I : R. R. Biswas.
| The doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56 of the Indian Contract Act.
The view that section 56 applies only to cases of physical impossibility and that where this section is not applicable recourse can be had to the principles of English law on the subject of frustration is not correct.
English cases can have only a persuasive value, and are only helpful in showing how English courts decided cases under similar circumstances.
Section 56 of the Indian Contract Act lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties.
According to the Indian Contract Act.
a promise may be express or implied.
In cases, therefore, where the court gathers as a matter of construction that the contract itself contained impliedly or expressly a term, according to which it would stand discharged on the happening of certain circumstances, the dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of section 56 altogether.
Although in English law these cases are treated as cases of frustration, in India they would be dealt with under section 32 of the Indian Contract Act which deals with contingent contracts or similar other provisions contained in the Act.
In the large majority of cases however the doctrine of frustration.
is applied not on the ground that the parties themselves agreed to an implied term which operated to release 311 them from the performance of the contract.
The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement.
Here there is no question of finding out an implied term agreed to by the parties embodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have any intention regarding it.
When ' such an event or change of circumstance occurs which is so, fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end.
The court undoubtedly has to examine the contract and the circumstances under which it was made.
The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed circum stances destroyed altogether the basis of the adventure and its underlying object.
This may be called a rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all rules of construction.
This is really a rule of positive law and as such comes within the purview of section 56 of the Indian Contract Act.
The reason underlying the rule of English law that the doctrine of frustration does not apply to contracts for the sale of land.
is that under the English law, ,is soon as the agreement to sell is complete the buyer becomes the owner of the land in equity.
As a mere agreement to sell does not confer any rights of ownership on the buyer under the Indian law, the doctrine of frustration is as applicable in India to agreements for sale of land as in the case of other agreements.
In 1940 as an integral part of a development scheme of an extensive area of land started by the defendant company, it entered into a contract with the plaintiff 's predecessor for the sale of a Plot of land to the latter accepting a small sum of money as earnest.
It undertook to construct roads and drains and the conveyance was to be completed soon after the completion of tile roads on payment of the balance of the Price.
As a considerable portion of the area comporised in the scheme was requisitioned by the Government for military Purposes in 1941, the company wrote to the defendant that the road construction could not be taken up for an indefinite period and required him to treat the agreement as cancelled and receive back his earnest: Held.
that having regard to the nature and terms of the contracts the actual existence of war condition at the time when it was entered into the extent of the work involved in the scheme fixing no time limit in the agreement for the cons truction of the roads etc., and the fact that the order of requisition was in its very nature of a temporary character, the requisition did not affect the fundamental basis of the contract; nor 312 did the performance of the contract become illegal by reason of the requisition, and the contract had not therefore become impossible within the meaning of section 56 of the Indian Contract Act.
Joseph Constantine Steamship Co. vs Imperial Smelting Cor poration Ltd. ([1942] A.C. 154), Tamplin Steamship Co. Ltd. vs Anglo American Products Co. Ltd. ([1916] A.C. 397), Kesari Chand vs Governor General in Council (I.L.R. , Ganga Saran vs Ram Charan ([1952] S.C.R. 36), Taylor vs Caldwell (3 B. and section 826), Robinson vs Davison ; Denny Mott and Dickson Ltd. vs James B. Frazer & Co. Ltd. ; referred to.
|
Appeal No. 12 of 1953.
Appeal from the Judgment and Decree dated the 31st March, 1949, of the High Court of Judicature at Bombay (Chagla C.J., Weston and Dixit JJ.) in First Appeal No. 175 of 1946, arising out of the Judgment and Decree dated the 28th February, 1946, of the Court of the Civil Judge, Senior Division at Broach in Special Suit No. 9 of 1941.
K. section Krishnaswamy Aiyangar (H. J. Umrigar, with him) for the appellants.
C. K. Daphtary, Solicitor General for India (J. B. Dadachanii, with him) for respondents Nos.
I and 2. 1953.
November 18.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is directed against a judgment and decree of the Bombay High Court, dated the 31st March, 1949, confirming, on appeal, the decision of the Civil Judge, Senior Division, at Broach, in Special Suit No. 9 of 1941.
The facts of the case, though a bit long, are not in controversy at the present stage and the entire dispute bet ween the parties centres round certain points of law relating to the rights of the reversioners, in whose favour a deed of surrender was executed by a Hindu widow, to recover 341 possession of the properties, belonging to the last male owner, during the lifetime of the widow from persons who acquired title to the same by adverse possession against the widow.
To appreciate the contentions that have been raised by the parties before us, it will be convenient to give a brief narrative of the material facts in their chronological order.
A reference to the short genealogical table given below will show at once the relationship between the parties to the present litigation.
Jijibhai | | | | | | Tribhovan Kashibhai | (died in 1914) | | Mathurbhai | | (diedin 1924) Shankarabhai Rukmini== ==Hirabai (died in 1922) Manubhai | ==Bai Kashi (husband) | (widow) | unjabhai (Deft. No. 3) | (died in 1931) | | | | | | | | | Natvarlal Ravajibhai Dadubhai RajiniKant (Deft. No. 1) (Deft.
No. 2) (Piff.1) (Plff. 2) One Jijibhai, whose name appears at the head of the table, had two sons, Tribhovan and Kashibhai.
Tribhovan had a son named Mathurbhai who died in 1924 leaving, behind him, his widow Hirabai and a son Punjabhai.
Kashibhai died in 1914 leaving a son Shankarbhai and a daughter Rukmini.
Shankarbhai, whose property is the subject matter of dispute in the present case, died without any issue in 1922, leaving his widow Bai Kashi who is defendant No. 3 in the suit.
It is said, that there was a notional partition between Kashibhai and Mathurbhai in 1913 which effected a severance of their joint status without any actual division of properties by metes and bounds.
Mathurbhai died on 26th January, 1924, and on the 2nd of June following Hirabai, his widow, made an application to the District Judge for appointment of a guardian of the person and property of her minor son Punjabhai, alleging, inter alia, that the minor was the sole owner of the entire joint estate by right 342 of survivorship.
On the 1st of July, 1924, Bai Kashi, the widow of Shankarbhai, was served with a notice of this application.
On the 17th of July following, she purported to adopt a son named Sivabhai and in answer to the notice in the guardianship proceeding served upon her, put forward the claim of her adopted son.
The District Judge regarded the adoption to be invalid and by his order dated November 29, 1924, appointed the Deputy Nazir of his court as guardian of the properties of the minor Punjabhai, the properties including the share of Shankarbhai in the joint estate.
The Deputy Nazir took possession of all the properties on behalf of the minor and it is not disputed that Bai Kashi never got possession of any portion of these properties since then.
In 1926 Bai Kashi as the guardian of her infant adopted son Sivabhai brought a Title Suit, being Suit No. 180 of 1926, claiming partition of the joint family properties on the allegation that, by adoption, Sivabhai became a co owner to the extent of a half share in them.
The suit was resisted by Punjabhai represented by his court guardian and the main contention put forward on his behalf was that the adoption, by the widow, of Sivabhai was invalid in law.
This contention was given effect to by the trial judge and by his judgment dated the 4th July, 1927, the suit was dismissed.
An appeal was taken against this decision, on behalf of Sivabhai, to the High Court of Bombay, but the appeal was withdrawn on the 25th July, 1927.
Thereafter in 1930, Rukmini, the sister of Shankarbhai and the mother of the present plaintiffs, instituted a suit, being Suit No. 350 of 1930, for a declaration that the joint status of the family was disrupted by the notional partition effected between Mathurbhai and Kashibhai in 1913 and she, as the next heir of Shankarbhai, was entitled to succeed to Shankarbhai 's share of the properties on the death of Bai Kashi.
The trial judge was of opinion that there was, in fact, a severance of joint status by an informal partition between Mathurbhai and Kashibhai, but he dismissed the suit on the ground that a suit of this character was not maintainable in law.
343 Rukmini died soon after that and her two sons, who were then minors, represented by their father as next friend, pre ferred an appeal to the High Court against this order of dismissal.
The High Court allowed the appeal and gave a declaration in favour of the appellants to the effect that there was disruption of the joint family in the year, 1913.
This judgment is dated the 8th of February, 1939, and there after on the 30th of January, 1941, Bai Kashi executed a deed of surrender in favour of the plaintiffs relinquishing her widow 's estate in favour of the husband 's nearest rever sioners.
On the basis of this deed of surrender the plaintiffs brought the suit, out of which this appeal arises, in the Court of the Civil Judge, Broach, claiming possession of the disputed properties as the next heirs of Shankarbhai against the defendants who are the sons and heirs of Punjabhai.
Bai Kashi was impleaded as defendant No. 3 in the suit.
The suit was resisted by defendants I and 2 who raised a number of pleas in answer to the plaintiffs ' claim.
The material defence was of a, three fold character.
It was contended in the first place that there was no partition between Mathurbhai and Kashibhai as alleged by the plaintiffs and the family being still joint when Shankarbhai died, the entire joint estate vested in Mathurbhai by right of survivorship.
It was alleged in the second place, that even if the family had separated, the adopted son of Bai Kashi being a nearer heir the plaintiffs had no title to the property.
The last and the main defence was that the defendants having acquired a title by adverse possession against the widow, and the widow having lost whatever interest she had in her husband 's property, the deed of surrender was invalid, and even if it was valid, the surrenderees could not claim possession so long as the widow was alive.
The trial court overruled all these contentions and decreed the plaintiff 's suit.
The defendants I and 2 preferred an appeal against this decision to the High Court of Bombay and the appeal first came up for hearing before a Division Bench consisting of Chagla C.J., and Dixit J.
The learned Judges, by their judgment 344 dated the 23rd January, 1948, which has been described as an interlocutory judgment, disposed of the first two points mentioned above and affirmed the decision of the trial court thereon.
It was held that the decision in Rukmini 's Title Suit No. 350 of 1930, to which the defendants were made parties, precluded them from challenging the fact of there being a partition between Mathurbhai and Kashibhai in 1913 and also from contending that Sivabhai was a validly adopted son.
There remained the only other question, namely, as to whether the plaintiffs could, on the basis of the deed of surrender, lay a claim for possession of the properties during the lifetime of the widow, as against persons, who had acquired title by adverse possession against her.
In regard to this point, a contention was raised on behalf of the appellants that the deed of surrender was not duly proved and as there was no definite finding on this point, the learned Judges sent the case back for findings on the two following issues which they themselves framed: (i)Whether the plaintiffs proved the deed of surrender dated 30th January, 1941 ? and (ii)Whether Bai Kashi surrendered the whole of her husband 's interest in the whole property of her husband? The trial court recorded its findings on both these issues after taking additional evidence and its findings were in favour of the plaintiffs.
After the findings were returned to the High Court, the appeal was heard by a Full Bench con sisting of Chagla C.J. and Weston and Dixit JJ.
The Full Bench confirmed the decree of the trial court and dismissed the appeal.
It was held by the learned Judges that even though the defendants acquired by adverse possession a title against the Hindu widow, the deed of surrender executed by her did not become infructuous or inoperative thereby; and as there was acceleration of inheritance in favour of the plaintiffs who were the next heirs of Shankarbhai, they were competent to recover possession of the properties at once by 34 5 evicting the defendants and were not bound to wait till the widow actually died.
It is the propriety of this decision that has been challenged bedore us by the defendants 1 and 2 in this appeal.
The arguments advanced by Mr. Krishnaswami Ayyangar, who appeared in support of the appealcan be conveniently considered under two heads.
The first branch of his contention is, that as the widow 's estate was in this case completely extinguished by adverse possession exercised by the defendants, she had, in fact, no interest left in her, which she could make a surrender of in favour of the reversions.
What is said is, that the widow, by suffering the trespassers to remain in possession of her husband 's estate for more than the statutory period, had placed it ab solutely beyond her power to deal with it any further; and her title being already extinguished by adverse possession, no further extinction by any act of surrender on her part was possible.
The other branch of the learned counsel 's contention is, that assuming, that the widow could make a surrender, such surrender could not prejudice the rights of persons, acquired by grant from the widow or by prescription against her prior to the date of surrender and these rights would, in law, endure during the entire period of the widow 's natural life.
Whatever rights the reversions could assert, they could assert only after the widow 's death and not during her lifetime.
A number of decided authorities have been canvassed before us in this connection by the learned counsel and it cannot be disputed that judicial opinion on these points is not at all uniform.
It seems to us that for a proper determination of the questions, it is necessary first of all to formulate as clearly as possible the precise nature and effect of what is known as "surrender" by a Hindu widow.
The word "surrender" cannot be said to be free from ambiguity.
It connotes nothing more than the English doctrine of merger and a Hindu widow, whose interest is usually, though incorrectly, likened to that of a life tenant under the English law, merely accele 346 rates the reversion by surrendering her limited interest in favour of the reversioner, undoubtedly no surrender can be effective if the widow has already parted with her interest in the property by a voluntary act of her own or her rights therein have been extinguished by adverse possession of a stranger.
The English doctrine of merger, though it may have influenced some of the judicial pronouncements in our country has really speaking no application to a Hindu widow 's estate.
The law of surrender by a Hindu widow as it stands at present, is for the most part, judge made law, though it may not be quite correct to say that there is absolutely no textual authority upon which the doctrine could be founded, at least, impliedly.
So far as the Dayabhag law is concerned, its origin is attributed to Jimutabahan 's commentary on the well known text of Katyayana which describes the interest of a childless widow in the estate left by her husband and the rights of the reversioners after her death(1).
While commenting on Katyayana 's text, Jimutabahan lays down that the persons who should be the next heirs on failure of prior claimants would get the residue of the estate after her use on the demise of the widow in whom the succession had vested, as they would have succeeded if the widow 's rights were non existent or destroyed (in otherways) [jatadhikaraya ; patnya: adhikikara pradlvamsspi bhogavasishtam dhanam grrhiyu : ] (2).
It was observed by Ashutosh Mookerjee J. in Debi Prosad vs Golap Bhagat(3) that the theory of relinquishment or surrender was foreshadowed in these remarks of Jimutabahan.
This much is clear from the passage referred to above that the commenta tor had in mind other modes of extinction of the widow 's interest in her husband 's properties besides the natural death of the widow, which would have the effect of letting in her husband 's heirs.
There is indeed no mention of surrender or renunciation in the text and it was not on the basis of any textual authority that the law of surrender developed in (1) Vide Dayabhag Chap.
II, section 1, paragraph 56.
(2) Dayabhag Chap.
II, section I, paragraph 59.
(3) at 771.
347 India.
But it Must be noticed that though certain terms and expressions of English law have been made use of in a some what loose sense, yet the radical idea involved in the doctrine of surrender by a Hindu widow is totally different from what is implied in the merger of a life interest in the reversionary estate under the English law.
In English law the reversioner or remainderman has a vested interest in the property and his rights are simply augmented by the surrender of the life estate.
In the Hindu law, on the other hand, the widow, so long as she is alive, fully represents her husband 's estate,.
though her powers of alienation are curtailed and the property after her death goes not to her but to her husband 's heirs.
The presumptive reversioner has got no interest in the property during the lifetime of the widow.
He has a mere chance of succession which may not materialise at all.
He can succeed to the property at any particular time only if the widow dies at that very moment.
The whole doctrine of surrender is based upon this analogy or legal fiction of the widow 's death.
The widow 's estate is an interposed limitation or obstruction which prevents or impedes the course of suc cession in favour of the heirs of her husband.
It is open to the widow by a voluntary act of her own to remove this obstruction and efface herself from the husband 's estate al together.
If she does that, the consequence is the same as she died a natural death and the next heirs of her husband then living step in at once under the ordinary law of inheritance.
In spite of some amount of complexity which is unavoidable in a law evolved by judicial decisions, this fund.
mental basis of the doctrine of surrender can be said to be established beyond doubt.
Thus Lord Dunedin in Gounder, v Gounden(1) enunciated the law in clear terms as follows: "It is settled by long practice and confirmed by decision that a Hindu widow can renounce in favour of the neares, reversioner if there be only one or of all the reversioners (1) 46 I.A. 72 at 79.
348 nearest in degree if more than one at the moment.
That is to say, she can, so to speak, by voluntary act operate her own death.
" Again in repudiating the suggestion that there could be any such thing as a partial surrender, His Lordship observed: "As already pointed out, it is the effacement of the widow an effacement which in other circumstances is effected by actual death or by civil death which opens the estate of the deceased husband to his next heirs at that date.
Now, there cannot be a widow who is partly effaced and partly not so.
" Thus surrender is not really an act of alienation of the widow of her rights in favour of the reversioner.
The rever sioner does not occupy the position of a grantee or transferee, and does not derive his title from her.
He derives his title from the last male holder as his successor in law and the rights of succession are opened out by the act of self effacement on the part of the widow which operates in the same manner as her physical death.
It is true that a surrender may and in the majority of cases does take the form of transfer, e.g., when the widow conveys the entire estate of her husband.
without consideration and not as a mere device to share the estate with the reversioner, in favour of the latter.
But "it is the self effacement by the widow that forms the basis of surrender and not the ex facie transfer by which such effacement is brought about"(2).
The true nature and effect of a surrender by a Hindu widow of her husband 's estate have been thus summoned up, and in our opinion quite correctly, by a Division Bench of the Madras High Court(3): "It is settled that the true view of surrender under the Hindu law is that it is a voluntary act of self effacement by the widow having the same consequences as her death, in opening up the succession to the next heirs of the last male owner.
The intermediate stage is merely extingushed and (1) I.L.R. 39 Mad. 1035.
(2) See Vytla Sitanna vs Mariwada 61 I.A. 200, 207 ; Mumareddi vs Pitti Darairaja , 661.
(3) Vide Damaraju vs T.Narayana I.L.R.1941 Mad.551,557.
349 not transferred and the law then steps in to accelerate succession so as to let in the next reversioner.
The surrender conveys nothing in law; it is purely a self effacement which must of necessity be complete; for, as the Privy Council has said, there cannot be a widow partly effaced and partly not just as there cannot be a widow partly dead and partly alive.
The fiction of a civil death is thus assumed when a surrender takes place; and when the reversioners come in they come in their own right as heirs of the last owner and not as transferees from the widow.
" As surrender conveys nothing in law and merely causes extinction of the widow 's rights in her husband 's estate, there is no reason why it should be necessary that the estate must remain with the widow before she could exercise her power of surrender.
The widow might have alienated the property to a stranger or some one might have been in adverse possession of the same for more than the statutory period.
If the alienation is for legal necessity, it would certainly be binding upon the estate and it could not be impeached by any person under any circumstance.
But if the alienation is not for legal necessity, or if a squatter has acquired title by adverse possession against the widow, neither the alienation nor the rights of the adverse possessor could affect the reversioners ' estate at all.
These rights have their origin in acts or omissions of the widow which are not binding on the husband 's estate They are in reality dependent upon the widow 's estate and if the widow 's estate is extinguished by any means known to law, e.g., by her adopting a son or marrying again, these rights must also cease to exist.
The same consequences should follow when the widow withdraws herself from her husband 's estate by an act of renunciation on her part.
Whether any equitable principle can be invoked in favour of a third party who has acquired rights over the property by any act or omission of the widow may be a matter for consideration.
But the learned counsel for the appellants is not right when he says that as adverse possession extinguished the rights of the widow, no fresh extinction by an act of surrender was possible.
As the rights acquired by adverse possession are 350 available only against the widow and not against the hus band 's heirs, the husband 's estate still remains undestroyed and the widow may withdraw herself from that estate leaving it open to the reversioners to take possession of it at once as heirs of the last male holder unless there is any other rule of law or equity which prevent them from doing so.
The first branch of the appellants ' contention cannot, therefore, succeed.
This leads us to the other branch of the appellants ' contention and the question arises whether in case of sur render by a Hindu widow, a person, who has, prior to the date of surrender, acquired, by adverse possession, an inte rest in the widow 's estate, can be ousted from possession of the property so long as the widow remains alive? This question, Mr. Ayyangar argues, should be answered in the negative.
His contention, in substance, is, that by reason of adverse possession for more than 12 years the title of the limited owner became extinguished under article 28 of the Limitation Act and the possessor acquired good title against the widow.
This title, it is said, cannot be displaced by the surrenderee who gets the property by reason of a, subsequent voluntary act on the part of the widow.
In support of this contention the learned counsel has placed reliance upon a number of cases, principally of the Madras High Court, where it has been held that a reversions in whose favour a surrender has been made by the widow cannot challenge the right of a prior alienee from the widow, even though the alienation was not for legal necessity, so long as the widow remains alive; and the same protection could be claimed by one who acquired the limited interest of a widow by adverse possession against her.
It is undisputed that there is considerable divergence of judicial opinion on this point and in these circumstances it is necessary to examine briefly the different lines of reasoning adopted by the different High Courts in dealing with the subject.
In Subbamma vs Subramanyam(4), which can be taken to be the leading pronouncement of the Madras High Court (1) I.L.R. 39 Mad.
351 on the point, it was held that a surrender by a Hindu widow could not affect prior alienations made by her, and even though such alienations might not be binding on the reversions as not being made for a proper or necessary purpose, they are binding on the widow for her life time or at any rate during the period of her widowhood.
In deciding this case the learned Judges relied mainly upon an earlier decision of the same court in Sreeramulu vs Kristamma(1), where the view taken was that an alienation, not for legal necessity, made by a Hindu widow, prior to adopting a son, could not be challenged by the adopted son so long as the widow remained alive.
In other words, the effect of a surrender by a Hindu widow was treated to be the same as that of an act of adoption by her.
Two years later, a Full Bench(2) of the Madras High Court overruled the decision in Sreeramulu vs Kristamma(1) and held that where a Hindu widow alienated property for a purpose not binding on the inheritance and thereafter adopt ed a son, the right of the adopted son was not prejudiced by the unauthorised transfer and he could sue for possession at once.
Although the Full Bench overruled the decision in Sreeramu vs Kristamma(1) which was relied on as an authority in Subbamnia 's case(3), yet the law enunciated in the latter case as regards the effect of surrender on previous alienations made by the widow was not dissented from, and Kumaraswami Sastriyar J., who was one of the Judges com posing the Full Bench.
in the course of his judgment, expressed the view that the adoption of a son by a Hindu widow to her husband was quite different from surrender in favour of the reversions, and to a relinquishment by the widow, based on no consideration of duty to her husband or his spiritual benefit, courts could very properly refuse to annex rights to defeat prior alienations made by her.
(1) (2) Vide Vaidyanatha Sastri vs Savithri I.L.R. (3) I.L.R. 39 Mad.
352 This view was approved in Sundarasiva vs Viyyamma(1) and has been accepted since then as good law in all the subsequent cases(2) of the Madras High Court.
The Madras High Court has also expressly held that the position of a person, who has acquired by adverse possession the limited interest of a Hindu widow is exactly the same as that of an alienee from her and if the title of such person has been completed already, it could not be defeated by a surrender made by the widow(1).
These decisions undoubtedly support the appellants ' case.
In the Calcutta High Court the question was raised in Prafulla Kamini vs Bhabani(4) as to whether a gift made by widow prior to surrendering her husband 's estate could be challenged by the reversioner during the period of the widow 's life.
The two Judges, constituting the Bench, differed in their opinion; and whereas Walmsley J. held that the gift was valid for the period of the widow 's life, Page J., on the other hand, after an elaborate discussion of the law relating to the legal affect of a widow 's surrender, came to the conclusion that the reversioner became immediately entitled to recover possession from the donee.
In view of the difference of opinion between the two Judges, there was an appeal filed under clause 15 of the Letters Patent, but the point in controversy was not decided by the Letters Patent Bench.
The matter again came up before another Bench of the Calcutta High Court consisting of D. N. Mitter and Rao JJ.(5).
Both the Judges concurred in holding that the view expressed by Page J. in the earlier case was right and that on a surrender by the Hindu widow of her husband 's estate and the consequent extinguish (1) I.L.R. (2) Vide the oases collected in Arunachala vs Arumugha I.L.R. (3) Vide Kamiraju vs Singaraju A.I.R. 1935 Mad. 664; Korabala vs Ratala A.I.R. 1951 Mad. 753.
(4) (5) Vide Ram Krishna vs Kausalya 353 ment of her interest therein all prior alienations in excess of her power were liable to be challenged by the reversioner immediately on the surrender taking effect just as they could be impeached if the widow died a natural death.
In the judgment under appeal the Bombay High Court has substan tially accepted the view taken by the Calcutta Judges in the case referred to above.
In the Allahabad High Court a Division Bench, consisting of Boys and Sulaiman JJ.
took a view similar to that of the Madras High Court, in Lachmi vs Lachho(1).
Boys J. in course of his judgment observed: "The doctrine of surrender having been imported into the Hindu law by judicial decision, we are entitled to import the complementary rule essential to the prevention of fraud that the widow cannot by making a surrender defeat rights created by herself and creation of which was within her authority." Sulaiman J., on the other hand, was very critical of this view and he expressed his own opinion(2) as follows: "I find great difficulty in discovering any true basis for holding that though the reversioner in whose favour the surrender has taken place has succeeded to the estate of the last male owner and derives title from him, he is nevertheless 1stopped from challenging any alienations made by the Hindu widow during her lifetime as if he were a grantee from her." In spite of these observations, however, the learned Judge agreed with Boys J. in the conclusion arrived at by the latter, principally on the ground that it would not work any hardship if the reversioner, in whose favour the surrender is made, were to take the property subject to the transfers made by the widow so as to allow the transfers to remain valid for her lifetime.
There has however been a definite change in the (1) I.L.R. 49 All. 334.
(2) I.L.R. 49 All 334 346.
354 view taken by the Allahabad High Court since then, and in a very recent pronouncement(1) of that court the learned Judges have expressly approved of the decision of the Calcutta High Court which is in entire agreement with the opinion actually expressed by Sulaiman J. as stated above.
So far as the Patna High Court is concerned, the case of Basudeo vs Baidyanath(2) was decided sometime before the case of Ram Krishna vs Kausalya(3) was heard by the Calcutta High Court and the learned Judges, without examining the principles of law independently, followed the Madras autho rities which had at that time been accepted by the Allahabad High Court.
An analysis of the Madras decisions, referred to above, upon which the learned counsel for the appellant places his reliance, will show that the grounds upon which they purport to be based are of a threefold character.
The first is that an alienation of property by a Hindu widow, in excess of her powers, though not binding on the inheritance, creates in the alience an interest commensurate with the period of her natural life.
A part of the interest, it is said, is severed from the husband 's estate when there is an alienation by the widow, and the reversioner when he takes the estate on surrender, takes it subject to the interest already created.
A person, who has acquired the widow 's interest by adverse possession against her, occupies, according to the Madras decisions, as stated above, the same position as an alienee from the widow.
The second ground is, that as the widow herself is in capable of disputing the title of the alienee or of the person who has acquired interest by adverse possession against her, a like disability attaches to the reversioner also who could not have obtained the properties but for the surrender made by the widow.
The third ground assigned is that the law of (1) Vide Raghuraj Singh vs Raba Singh A.I.R. 1952 All. 875.
(2) A.I.R. 1935 Pat.
(3) 355 surrender being a judge made law, the courts in recognising the right of surrender by a Hindu widow can and ought to impose conditions on the exercise of her power based on considerations of justice, equity and good conscience, and surrender being a purely voluntary act on the part of the widow, she could not be allowed by her own act to prejudice the interests which she had already created.
The first line of reasoning mentioned above is based upon the dictum of Bhashyam Ayyangar J. in Sreeramulu vs Kristamma(1), which though accepted in ubbamma 's case(1), was expressly dissented from in the subsequent Full Bench decision in Vaidyanatha vs Savithri(3).
This view, in our opinion, proceeds upon a misconception regarding the true nature of a, Hindu widow 's estate and the rights and duties which vest in her under the Hindu law.
Though loosely des cribed as a "life estate", the Hindu widow 's interest in her husband 's property bears no analogy to that of a "life tenant" under the English law.
As was pointed out by the Judicial Committee(1) as early as 1861, the estate which the Hindu widow takes is a qualified proprietorship with powers of alienation for purely worldly or secular purposes only when there is a justifying necessity and the restrictions on the powers of alienation are inseparable from her estate.
The restrictions, as the Judicial Committee pointed out, which are imposed on the Hindu widow 's powers of alienation, are not merely for the protection of the material interest of her husband 's relations, but by reason of the opinion expressed by all the Smriti writers that the Hindu widow should live a life of moderation and cannot have any power of gift, sale or mortgage except for religious or spiritual purposes.
The Hindu law certainly does not countenance the idea of a widow alienating her property without any necessity, merely as a (1) (2) I.L.R. 39 Mad. 1035.
(3) I.L.R. 41 Mgad.
(4) Vide Collector of Masulipatam vs Cavaly Venkata 8 M.I.A. 529.
356 mode of enjoyment, as was suggested before us by Mr. Ayyangar.
If such a transfer is made by a Hindu widow, it is not correct to say that the transferee acquires necessarily and in law an interest commensurate with the period of the natural life of the widow or at any rate with the period of her widowhood.
Such transfer is invalid in Hindu law, but the widow, being the grantor herself, cannot derogate from the grant and the transfer cannot also be impeached so long as a person does not come into existence who can claim a present right to possession of the property.
As in the majority of cases, persons with such rights come into existence only when the widow dies it is generally said that the alienee gets the estate for the term of the widow 's life.
We think that the legal position has been correctly indicated by Kumaraswami Shastriyar J. in the Full Bench case(1) referred to above.
On the one hand, a Hindu widow has larger rights than those of a life estate holder, inasmuch as, in case of justifying necessity she can convey to another an absolute title to the properties vested in her.
On the other hand, where there is no necessity for alienation, the interest, which she herself holds and which she can convey to others, is not an indefeasible life estate, but an estate liable to be defeated on the happening of certain events which in Hindu law cause extinction of the widow 's estate.
Remarriage by the widow is one such event which completely divests her of any interest in her husband 's property.
Adoption of a son to her husband is another circumstance which puts an end to her estate as heir to her husband, the effect of adoption being to bring in a son who has prior claims to succession under the Hindu law.
In both these sets of circumstances it is not disputed that prior rights derived from the widow, if not supported by legal necessity, could be defeated by the next heir of the husband or the adopted son as the case may be.
If the effect of surrender, as explained above, is to destroy the widow 's estate in the same way as if she suffered physical or civil death, there is no conceivable reason why the reversioner should not, subject to any question of fraud or collusion that might arise, be in a position to recover possession of the properties from (1) Vide, Vaidyanatha vs Savithri, I.L.R. 357 an alienee from the widow or from one who has obtained title by adverse possession against her, as none of them could acquire rights except against the widow herself.
Kumaraswami Shastriyar J. is of opinion(1) that a, surrender stands on a different footing from adoption by a widow.
According to the learned Judge, the surrender by the widow and the acceptance of the estate by the reversioner are purely matters of contract.
The widow is not bound to surrender the estate, nor is the reversioner bound to accept it, except on terms which would apply to any other transfer of immovable property so far as prior alienees are concerned.
This, in our opinion, involves a total misapprehension of the nature and legal effect of surrender by a Hindu widow as we have already explained.
Surrender is not alienation of an interest of the widow in favour of the reversioner, and no acceptance by the reversioner is necessary as a condition precedent to the vesting of the estate in him.
The estate vests in the reversioner under operation of law without any act on his part.
It is also difficult to see why the learned Judge looked upon surrender as a matter of contract between the widow and the reversioner.
It is true that the widow at the time of surrendering her husband 's estate can, if she likes, stipulate for a right to be maintained out of the properties for her lifetime; but reservation of such small benefit absolutely necessary for her maintenance does not invalidate a surrender as has been held by the Privy Council in more cases than one(1).
Mr. Ayyangar argues that a widow, who requires to be maintained out of her husband 's property, cannot be said to have suffered death.
But this argument is fallacious.
Nobody says that the surrendering widow actually dies.
It is a fiction of law pure and simple and it is for the law to determine under what circumstances this fiction of natural or civil death would arise.
There is such a legal fiction involved in adoption also when a son is adopted by a widow subsequent to the death of her husband.
Such adopted son is given the rights of a posthumous son and the fiction is that he was in existence from before (1) Vide Vaidyanatha vs Savithri, I.L.R. at 99.
(2) Vide Sureswar Misra vs Mahesarani, 47 T. A. 233.
358 the date of the proprietor 's death, although the fact is otherwise.
So far as the legal consequences are concerned, there is no material difference between an adoption and an act of surrender by the widow.
In our opinion, there is no warrant in Hindu law for the proposition that in case of alienation by a Hindu widow of her husband 's property without any justifying necessity, or in the case of a stranger acquiring title by adverse possession against her the interest created is to be deemed to be severed from the inheritance and if a surrender is made subsequently by the widow, the surrenders must take it subject to such prior interest.
Sulaiman J. in the Allahabad case(1) cited above enunciated the law with perfect precision when he said that the effect of an alienation by a widow is not to spilt up the husband 's estate into two parts or to give to the alienee an interest necessarily co extensive with her lifetime.
The reversionary right to challenge it is no part of the widow 's estate at all and, therefore, could not be surrendered to the reversioner.
The first line of reasoning, therefore, seems to us to be of no substance.
The second ground upon which the Madras decisions purport to be based is manifestly untenable.
The widow her self may be incapable of derogating from her own grant and disputing the alienation which she has herself made; but as has been said already, surrender is not an alienation and as the reversioner does not derive his title from her, there is no principle of law under which the acts of the widow could bind him.
As Sulaiman J. pointed out in the case just referred to, that if the reversion were a grantee from the widow, he would not only have been stopped from challenging the alienation during her lifetime, but would have been equally estopped from challenging it after her death; admittedly that is not the case(1).
It is true that the surrender benefits the reversioner but the benefit comes to him under the provision of general law as a result of self effacement by the widow.
No estoppel can possibly be founded on the receipt of such bene (1) Vide Lachini Chand vs Lachho, I.L.R. 49 All.
(2) Vide I.L.R. 49 All.
334 at 346.
355 Coming now to the third ground, it is certainly true that a surrender is a voluntary act on the part of the widow and she is under no legal or moral obligation to surrender her estate.
Instances do arise where an alienee has paid valuable and substantial consideration for a property on the expectation of enjoying it so long as the widow would remain alive and his expectations have been cut short by a surrender on the part of the widow, which no doubt benefits the reversioner in the sense that he gets the inheritance even during the widow 's lifetime.
On the other hand, a person, who takes transfer from a Hindu widow, acts with his eyes open.
If the transfer is without any legal necessity, there is a risk always attached to the transaction, and there is no law, as we have already ,explained, which secures to him necessarily an estate for life.
A man making a purchase of this character is not expected to pay the same value which he would pay if the purchase were made from a full owner.
Be that as it may, even assuming that the court is not incompetent to impose conditions on the reversions ' right of recovering possession of the property during the widow 's lifetime on grounds of equity, justice and good conscience in proper cases, it is clear that in the case before us no equitable considerations at all arise.
The appellants are not alienees from the widow ; they came upon the land as trespassers with,out any right and it is the law of limitation that has legalised what was originally a clear act of usurpation.
They have enjoyed their property since 1925, and as the title which they have acquired is not available against the reversionary interest, we do not see any reason sanctioned by law or equity for not allowing the reversions their full legal rights.
The result is that in our opinion the decision of the High Court is right and this appeal must stand dismissed with costs.
Appeal dismissed.
Agent for respondents Nos.
I & 2 : A. C. Dave.
| Where a Hindu widow surrenders her widow 's estate to the reversioners, after a third person has acquired title to the properties by adverse possession against her, the reversioners are entitled to recover possession of the properties from that person immediately as heir 's of the last male holder.
The person in adverse possession is not entitled to remain in possession till the death of the widow.
So far as the legal consequences are concerned there is no material difference in this respect between an adoption and an act of surrender by the widow.
As a surrender by a Hindu widow does not convey any title to the reversioners, but is only a voluntary act of self effacement by the widow, she can make a valid surrender under Hindu law even after another person has acquired title by adverse possession against her.
The reversioners do not take the property subject to the rights created by the widow.
Surrender by the widow and acceptance by the reversioner are not matters of contract.
The estate vests in the reversioner by operation of law without any act of acceptance on the part of the reversioner.
L/B(D)2SCI 8(a) 340 The view that, as the widow herself is incapable of disput ing the title of alienee, or of the person who has obtained title by adverse possession, a like disability attaches to the reversioner, is also unsound as the reversioner does not derive title from the widow even in the case of a surrender.
Assuming that the court has power to impose conditions on the reversioners ' right to recover possession during the lifetime of the widow on considerations of equity, justice and good conscience and to prevent the widow, by her own act, from prejudicing the interests she has created, no such equitable considerations arise in favour of persons who have come upon the land, as trespassers and claim title by adverse possession.
Subbamma vs Subrahmanyam (I.L.R. 39 Mad.
1035), Sundrasiva vs Viyyamma (I.L.R. , Arunachala vs Arumuga (I.L.R. , Lachmi vs Lachho (I.L.R. 49 All. 334) and Basudeo vs Baidyanath (A.I.R. 1935 Pat.
175) disapproved.
Ram Krishna vs Kausalya , Raghuraj Singh vs Babu Singh (A.I.R. 1952 All. 875) approved.
Vaidyanatha vs Savitri (I.L.R. commented upon.
|
Appeal No. 165 of 1951.
Appeal by special leave granted by the Supreme Court on the 27th March, 1951, from the Judgement and Order dated the 22nd March, 1950, of the High Court of Judicature at Bombay (Chagla C. J. and Tendolkar J.) in its Original Civil Jurisdiction in Income tax Reference No. 30 of 1947.
M.C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the Commissioner of Income tax.
B.J. M. Mackenna (P. N. Mehta, with him) for the res pondent.
October 26.
The Judgement of the Court was deli vered by DAS J. L/B(D)2SCI 5(a) 292 DAS J.
This is an appeal, by special leave granted by this court, from the judgment and order pronounced by the High Court of Judicature at Bombay on the 22nd March, 1950, on a reference (I. T. Reference No. 30 of 1947) made by the Income tax Appellate Tribunal at the instance of the appellant under section 66(1) of the Income tax Act (XI of 1922).
The facts necessary to be stated for the purpose of disposing of the present appeal are these: The Royal Western India Turf Club Ltd. (hereinafter referred to as the "com pany") was incorporated in 1925 under the Indian Companies Act, 1913.
The objects for which the company was incorporated were, inter alia as follows: (a) To take over the assets, effects and liabilities of the then unincorported club known as the Western India Turf Club; (b) to carry on the business of a Race Course Company in all its branches. . . ; (c) to establish any Clubs, Hotels and other conveniences in connection with the property of the company; (d) to carry on the business of Hotel Keepers, Tavern Keepers,licensed victuallers and refreshment purveyors , (e) to sell, improve, manage, develop, lease, mortgage, dispose of or otherwise deal with all or any part of the property of the company, whether movable or immovable, with power especially to sell and distribute or to permit to be sold and distributed wines, spirits, tobacco and other stores.
The liability of the members is limited by guarantee, each member undertaking to contribute to the assests of the company, in the event of its being wound up, such sum as May be required, not exceeding one rupee, for payment of the debts and liabilities of the company and the costs, charges and expenses of the winding up.
Clause 6 of the memorandum provides that if upon the winding up or dissolution of the company there remains after the satisfaction of all debts and liabilities any property whatsoever, the same would be 293 paid to or distributed among the members of the club in equal shares.
Under the company 's articles of association that were in force during the accounting year, besides Honorary Stand Members, Visiting Members and Temporary Members there were two main categories of members, namely, the Club Members and Stand Members.
The number of Club Members was limited to 350, exclusive of four designated high dignitaries and the number of Stand, Members was liable to be limited by the committee at any time.
Club Members and Stand Members had to be elected by ballot by the committee.
On election every Club member had to pay an entrance fee of Rs. 150 and a stand member had to pay an entrance fee of Rs. 75 Members of either class had also to pay an annual subscription of Rs. 25.
The entire management of the company and the control over its funds and property were left in the hands of a committee of nine Club Members elected as provided in the articles of association of the company.
The company was and is the lessee of two plots of land,, one in Bombay and the other in Poona.
Two race courses have been laid out on these plots of land.
On each race course there are three enclosures known as Members ' Enclosure, First Enclosure and Second Enclosure.
Each enclosure has a stand or stands from which races are watched.
The Members ' Enclosure is for the exclusive use of the members, their wives and unmarried daughters above the age of 12 years and their guests.
The First and Second Enclosures are open to the public.
For admission into each of the three enclosures an admission fee is charged.
In the Members ' Enclosure admission is by season tickets or daily admission gate tickets.
Private Boxes in the Members ' Enclosure are avilable to members on payment according to the number of chairs in the box.
In addition to the admission fees to the Members ' Enclosure, a member has to pay, in respect of his guests, an additional fee.
In each of the enclosures there is a totalisator run on the parimutuel system at which 294 persons in that enclosure place their bets on each race.
These several totalisators are linked by electric appliances, so that the moneys received from members and non members are included in one pool and distributed amongst the holders of the winning tickets in equal proportions.
In each enclosure there is arrangement for the supply of refreshments on payment.
The present disputes arose in connection with the assessment of the company 's income, profits or gains in the accounting year 1st July, 1938, to 30th June, 1939.
The company received large sums of money on admission tickets from members as well as from non members besides other moneys on other accounts.
The company claimed that in computing its total income, the following four items of receipts should be excluded: (1) Season admission tickets from members Rs. 23,635 (2) Daily admission gate tickets from members Rs. 51,777 (3) Use of private boxes by members Rs. 21,490 (4) Income from entries and forfeits received from the members whose horses did not run in the races durring the season Rs. 82,490 There was no dispute as to the liability of the company in respect of moneys received from non members and moneys received on all other accounts.
The Income tax 0officer held that all the four items mentioned above were receipts from business falling under section 10(1) of the Income tax Act or, in the alternative, were receipts by an association performing specific services for its members for remuneration definitely related to those services within the meaning of section 10(6) of the Act and assessed accordingly.
On appeal by the company the Appellate Assistant Commissioner dismissed the appeal.
He held that the company was carrying ing on business and that all the above mentioned four on business and that all the above mentioned four items were receipts from business within the meaning of section 10(1), although none of those items fell within section 10(6).
295 On a further appeal by the company to the Income tax Appel late Tribunal the latter came to the conclusion that none of the sums in question could be said to be profits or gains of a business coming under section 10(1).
The Tribunal also held that items 1, 2 and 3 did not also come within the ambit of section 10(6) of the Act.
Apparently the Tribunal did not consider the applicability of section 10(6) with regard to the fourth item.
On the application of the Commissioner of Income tax, Bombay, the Appellate Tribunal, under section 66(i) of the Act referred the following two questions for the opinion of the Bombay High Court, namely (1) whether on the facts found or admitted in the case, The Royal Western India Turf Club Ltd., Bombay, received the sums of Rs. 23,635, Rs. 51,777, Rs. 21,490 and Rs. 82,490 from a business carried on by it with the members within the meaning of section 10(1) of the Indian Income, tax Act? (2) whether on the facts found or admitted in the case, The Royal Western India Turf Club Ltd., Bombay, received the sums of Rs. 23,635, Rs. 51,777 and Rs. 21,490 [and Rs. 82,490 with regard to which sum the Tribunal did not consider the applicability of section 10(6)] as a trade, professional or similar association performing services for its members for remuneration definitely related to those services within the meaning of section 10(6) of the Indian Income tax Act? The reference having come up for hearing the High Court found that the statement of the case was insufficient and incomplete and accordingly it sent back the reference to the Appellate Tribunal with directions to submit a proper statement of facts.
The Appellate Tribunal thereupon sub mitted a supplementary statement of the case setting forth in greater detail the facts necessary for the disposal of the reference.
On further hearing of the reference in the light of this supplementary statement of the case the High Court held that the company performed two distinct functions, namely, the carrying on of the business of racing and the carrying on of the club and that the first three items of 296 Rs. 23,635, Rs. 51,777 and Rs. 21,490 were charged to the members in respect of the various amenities specified in the supplementary statement of the case which were given by the club only to its members namely, the use of the Members ' Enclosure on payment of admission fee, the use of the members ' totalisator, the right to watch the races from the lawn or from an unreserved seat in the Members ' stand, the use of a private box subject to payment and the use of the Guest House at Poona.
Accordingly the High Court held that the said first three items did not fall either under section 10(1) or section 10(6) of the Act.
With regard to the sum of Rs. 82,490 the High Court held that it did not come under section 10(6) but was a part of the income of the business of horse racing done by the company.
Accordingly the High Court answered question No. I in the negative as regards the first three items of Rs. 23,635, Rs. 51,777 and Rs. 21,490 and in the affirmative as regards the fourth item of Rs. 82,490 and it answered question No. 2 in the negative in respect of the first three items and in the affirmative with regard to the fourth item.
In effect the High Court held that the first three items were not taxable either under section 10 (1) or section 10(6) and that the fourth item was taxable under both the said sub sections of that section.
The Bombay High Court having dismissed the application of the Commissioner of Income tax under section 66 A (2) to appeal to this court, the Commissioner applied for and obtained special leave to appeal to this court.
The company has not appealed from that part of the order which declared that the fourth item of Rs. 82,490 was taxable.
Therefore, the questions we have to decide in this appeal are: (1) whether the first three items are receipts from business carried on by the company, and (2) whether those three items are receipts by a trade or professional or similar association performing specific services for its members for remuneration definitely related to those services.
On the first point our attention is drawn to the objects of the company as set forth in its memorandum of associa 297 tion.
It appears that the objects of the company are, inter alia, to carry on the business of a Race Course company in all its branches and to carry on the business of Hotel Keepers, tavern keepers, licensed victuallers and refreshment purveyors.
Although this circumstance may not be decisive, it cannot ,it the same time be overlooked altogether.
It has to be noted as one of the material facts.
Then we have the fact that so far as non members are concerned the company does carry on a horse racing business and the moneys it realises from nonmembers for admission into the First and Second Enclosures to watch the races from an unreserved seat therein and for the use of the totalisator and other amenities are income, profits or gains of that business.
It is also to be noted that the rates of daily admission fee charged on the non members for ad mission into the First Enclosure and for the railway tickets are exactly the same as those charged from the members for admission into the Members ' Enclosure.
Finally, it has been declared by the High Court by the order under appeal and it is now accepted by the company that the company derived the sum of Rs. 82,490 (the fourth item mentioned above) from the horse racing business carried on by it with its members within the meaning of section 10(1) of the Act.
If this sum of Rs. 82,490 received from members represents, as held by the High Court, a part of the income of the horse racing business, why are not the first three items of receipts also parts of the income, profits or gains of that very business? On what principle or authority are those three items to be excluded from the computation of the total business, income of the company? In support of its claim for exemption from tax liability in respect of these three items the company relies on the principles laid down by the House of Lords in the much dis cussed case of The New York Life Insurance Co. vs Styles (Surveyor of Taxes)(1).
The appellant in that case was an incorporated company.
The company issued life policies of two kinds, namely, participating and non participating.
There were no shares or shareholders in the ordinary sense of (1) ; L.R. 14 App.
298 the term but each and every holder of a participating policy became ipso facto a member of the company and as such became entitled to a share in the assets and liable for a share in the losses.
A calculation was made by the company of the probable death rate among the members and the probable expenses and liabilities and calls in the shape of premia were made on the members accordingly.
An account used to be taken annually and the greater part of the surplus of such premia over the expenditure referable to such policies was returned to the members i.e., (holders of participating policies) and the balance was carried forward as fund in hand to the credit of the general body of members.
The question was whether the surplus returned to the members was liable to be assessed to income tax as profits or gains.
The majority of the Law Lords answered the question in the negative.
It will be noticed that in that case the members had associated themselves together for the purpose of insuring each other 's life on the principle of mutual assurance, that is to say, they contributed annually to a common fund out of which payments were to be made, in the event of death, to the representatives of the deceased members.
Those persons were alone the owners of the common fund and they alone were entitled to participate in the surplus.
It was, therefore, a case of mutual assurance and the individuals insured and those associated for the purpose of meeting the policies when they fell in and receiving the surplus, were identical and it was said that that identity was not destroyed by the incorporation of the company.
Lord Watson even went to the length of saying that the company in that case did not carry on any business at all, which perhaps was stating the position a little too widely as pointed out by Viscount Cave in a later case; but, be that as it may, all the noble Lords who formed the majority were of the view that what the members received were not profits but were their respective shares of the excess amount contributed by themselves.
The cases of The Cornish Mutual Assurance Co. Ltd. vs The Commissioners of Inland Revenue(1) and Jones vs South (1) ; ; 299 Wales Lanacashire Coal Owners ' Association Ltd.(1), both of which were cases of mutual assurance companies with the liability of the members limited by guarantee carry the mater no further.
Indeed, the decision in the Cornish case as to the surplus of the contributions over the expenses would have been the same as in Styles ' case (supra) but for the special provisions of section 52(2)(b) according to which profit was made to include in the case of mutual trading concerns the surplus arising from transactions with members.
Jones ' case also shows that the fact that under the rules the surplus was not distributable except on the winding up of the company makes no difference in the application of the principle laid down in Styles ' case (supra).
Municipal Mutual Insurance Ltd. vs Hills(2) was relied on by the learned Attorney General as showing the real ground on which Styles ' case (supra) was decided.
The appellant there was an incorporated company.
It was formed by the representatives of various local authorities by co operation to insure against fire on favourable terms.
Effective control was in the hands of the fire policy holders who alone were entitled, on winding up of the company, to participate in the surplus assets.
In course of time the company undertook an extensive business in employers ' liability and miscellaneous insurance.
The Crown admitted that fire insurance business which was a mutual business was not taxable.
The company admitted that the employers ' liability and miscellaneous insurance business done with outsiders were liable to tax.
The question was whether the employers ' liability and miscellaneous insurance business done with fire policy holders who were members of the company were liable to be brought to charge.
It was held by Rowlatt J. that they were and this decision was upheld by the Court of Appeal and the House of Lords.
The argument in that case was that where the person with whom employers ' liability or miscellaneous insurance business was done happened to be also a fire policy holder, the profit or surplus arising from that (1) ; (2) [1932] 16 Tax Cas.
430; 48 T.L.R. 301; 300 operation came back into a body of which he himself was a member.
This circumstance, it was claimed, made it mutual and as such exempt from taxation under Styles ' case.
This argument was repelled by Rowlatt J. on the ground, inter alia, that there was not the slightest distinction between what was made out of a member in respect of non fire busi ness and what was made out of a non member out of non fire business, for qua that business the member was a stranger.
In other words, there was no identity in character of the contributor and the participator.
Said Viscount Dunedin in the House of Lords: "In so far as the surplus arises from a fire policy they are really entitled to the money as being those who contri buted it and accordingly it has been admitted that any profit made on the fire policies is governed by the New York case.
But as regards employers liability business and miscellaneous business it does not go to the contributors for, as fire policy holders in a body, they have not 00contributed and therefore the business is in the same position as business with complete outsiders, the surpluses in which are admitted to be profit.
" Lord, Macmillan said at page 447 of the report in Tax Cases: "The cardinal requirement is that all contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contributors to the common fund; in other words there must be complete identity between the contributors and the participators.
If this requirement is satisfied, the particular form which the association takes is immaterial.
" Styles ' case (supra) has recently been examined and explained by the Judicial Committee in English & Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax, Assam(1).
After referring to various passages from the speeches of the different Law Lords in Styles ' case, Lord Normand, who delivered the judg ment of the Board, summarised the grounds of the decision in Styles ' case as follows: (1) ; 75 I.A. 196; 301 "From these quotations it appears that the exemption was based on (1) the identity of the contributors to the fund and the recipients from the fund, (2) the treatment of the company, though incorporated as a mere entity for the con venience of the members and policy holders, in other words, as an instrument obedient to their mandate and (3) the im possibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves." The Judicial Committee held that none of these grounds was available on the special facts of the case before them and, therefore, the principles laid down in Styles ' case (supra) were wholly inapplicable to that case.
It is clear to us, taking the facts admitted or found in the case before us, that the principles of Styles ' case, as ex plained by subsequent decisions noted above, can have no application to this case.
Here there is no mutual dealing between the members inter se in the nature of mutual insur ance, no contribution to a common fund put up for payment of liabilities undertaken by each contributor to the other contributors and no refund of surplus to the contributors.
There being no mutual dealing the question as to the com plete identity of the contributors and the participators need not be raised or considered.
Suffice it to say that in the absence, as there is in the present case, of any dealing between the members inter se in the nature of mutual insurance the principles laid down in Styles ' case and the cases that followed it can have no application here.
The principle that no one can make a profit out of himself is true enough but may in its application easily lead to confusion.
There is nothing per se to prevent a company from making a profit out of its own members.
Thus a railway company which earns profits by carrying passengers may also make a profit by carrying its shareholders or a trading company may make a profit out of its trading with its members besides the profit it makes from the general public which deals with it but that profit belongs to the members as shareholders and does not come back to them as persons who had contribued 302 them.
Where a company collects money from its members and applies it for their benefit not as shareholders but as per sons who put up the fund the company makes no profit.
In such cases where there is identity in the character of those who contribute and, of those who participate in the surplus, the fact of incorporation may be immaterial and the incor porated company may well be regarded as a mere instrument, a convenient agent for carrying out what the members might more laboriously do for themselves.
But it cannot be said that incorporation which brings into being a legal entity separate from its constituent members is to be disregarded always and that the legal entity can never make a profit out of its own members.
What kinds of business other than mutual insurance may claim exemption from tax liability under section 10(1) of the Act under the principles of Styles ' case need not be here considered; it is clear to us that those principles cannot apply to an incorporated com pany which carries on the business of horse racing and realises money both from the members and from non members for the same consideration, namely, by the giving of the same or similar facilities to all alike in course of one and the same business carried on by it.
Learned counsel for the company then contends that the carrying on of the business of horse racing is not the only function or activity of the company.
It also runs a club, that is to say, an association of persons who co operate to provide for themselves social, sporting and similar amenities.
If the contributions from the members of the club exceed the cost of providing the amenities and if the surplus is held for the benefit of the members such surplus, according to him, is not taxable.
For this purpose no dis tinction, it is said, can be made between the entrance fees or the periodical subscriptions or any other sum (e.g., ad mission fee, daily or seasonal) paid by the members for the right to make use of the amenities provided by the club.
For the purposes of this argument it is said to be immaterial whether the club is an incorporated company or an unregistered association.
Finally it is urged that the fact that a 303 club has business dealings with the public in respect of which tax is payable does not render the club liable to tax in respect of the difference between the cost of providing amenities for its members and the contribution towards this cost which the club takes from its members either by way of subscription or of charges for the use of club amenities.
The advantage of a member, it is pointed out, is that he can meet his fellow members in the Members ' Enclosure without having to rub his shoulders with the members of the public who have no right of entry in the Members ' Enclosure and he cart also have the various other amenities provided ex clusively for members which are listed in the supplementary statement of the case.
Reference is made by learned counsel to several club cases, English and Indian, and other cases in support of his contentions.
Styles ' case and other cases of mutual dealing have already been dealt with and need not be referred to again.
It will suffice now to examine the club cases.
The earliest club case cited before us is that of Carlisle and Silloth Golf Club vs Smith(1).
In that case the club was an unincorporated association of members who paid subs cription and became entitled to play on the golf links of the club.
There was no question of division of profits.
Under the lease between the club and its lessors the club was bound to admit visitors on payment of "green fees".
The only question was whether the profits arising out of the "green fees" collected from outsiders were taxable.
In course of his judgment Buckley L. J. referred to Styles ' case and said that a man could not make a profit or loss out of himself and, that that was the ground of decision in Styles ' case.
It should not, however, be overlooked that the question whether the profits arising out of the members ' subscription were assessable or not was not in issue in that case at all.
That decision, therefore, does not help the company in this case.
In the Royal Calcutta Turf Club vs Secretary of State(1) the assessee was an unincorporated club.
It was held that (1) [1913]3 K.B. 75; (2) Cal. 841; A.I.R. (1921) Cal 633; 304 the club carried on business within the meaning of the Excess Profits Duty Act (X of 1919) and was liable to pay tax in respect of money received from the public by way of entrance fees to the stand, entry fees for race horses, book makers ' license fees and percentages of the totalisator.
There, as in the Carlisle and Siiloth Golf Club case (supra), no question was raised as to the taxability of moneys paid by the members of the clubs.
The case of the United Services Club, Simla vs The Crown(1) has been strongly relied on by learned counsel for the company.
There the club was an incorporated company.
it had no dealings with outsiders and derived no profit from outsiders.
The question was directly raised as to whether the income derived from its members was taxable profit.
It was held, on the authority of Styles ' case and the Carlisle & Silloth Golf Club case.
that under the English law the in come derived by a society or club from its members was not liable to tax and that the same principle should be followed in India.
The proposition so broadly stated overlooks the real grounds of the decision in Styles ' case as explained in later cases and cannot be accepted as an accurate statement of the English law.
In Carlisle & Silloth Golf Club case as in the Royal Calcutta Turf Club case, as already stated, the question of the moneys received from members was not in issue at all.
In this case, namely, in the United Services Club case, there was no dealing between the company and the outside public at all and the surplus was derived by the club only out of its dealings with its members.
There was no mutual dealing between the members inter se and there was no question of distribution of any surplus amongst the members and, therefore, there could be no question of identity of contributors and participators and as such the company could not claim exemption from tax under the principles of either of the two cases relied on by Martineau J.
His decision can only be supported on the ground that the (1) Lah. 109; A.I.R. 1921 Lab. 208; 1 I.T.C. 113.
305 club did not really carry on any business with its members with a view to earning profits and, therefore, the surplus of receipts from the members over the expenditure could not be said, to be profit of any business which could be assessed to tax.
The next case is what is known as the Eccentric Club case(1).
In that case a company limited by guarantee carried on a social club, its objects being to promote social intercourse amongst gentlemen connected (directly or indirectly) with literature, art, music, the drama, the scientific and liberal professions, sports and commerce, to establish a club and generally to afford to members the usual privileges and advantages of a club, to sell and deal in or arrange for supply of all kinds of provisions and refreshments.
By its memorandum of association the profits made by it were not distributable among its members either before or even after its winding up.
Payments were made by the members for services they received at the club premises, e.g., the provision of meals etc.
The company 's account showed a surplus of income over expenditure.
There was no receipt in the nature of trade from non members.
It was held by the Court of Appeal that the company was not carrying on any undertaking of a similar character to that of a trade or business within the meaning of section 53(2)(h) of the Finance Act, 1920.
Warington L.J. observed at pages 421 422 of the report in the Law Reports series: "The club proprietor, whether an individual or a company, carries on a business with a view to profit as an ordinary commercial concern.
This the present company certainly does not do.
I think the proper mode of regarding the company in the present case is as a convenient instrument for enabling the members to conduct a social club, the objects of which are immune from every taint of commerciality, the transactions of sale and purchase being purely incidental to the attainment of the main object.
What is in fact being carried on, putting technicalities aside, is a members club and not a proprietary club nor any undertaking of a similar character.
" (1) [ ; 12 Tax Cas, 05 8. 306 There was in that case no carrying on of any business with any outsider.
The dealings with members were really not in the way of any trade or business and it is only on that basis that the profits were held not to fall within the Finance Act.
The position of the company in the United Services Club case (supra) was similar and, as already stated, that decision can be supported only on this principle.
The case of Dibrugarh District Club Ltd., vs Commissioner of Income tax, Assam(1), is, if anything, against the company.
There an incorporated company carried on a club for the benefit of such persons as might become members.
Under the articles of association no shareholder was entitled to the benefits and privileges of the club unless he was elected as a member.
All shareholders were not members and all members were not shareholders.
Profits were distributable only amongst the shareholders every year.
It was held that the company was assessable on the full amount of its profits derived from shareholder members as well as from non share holder members as the company was not a mutual trading society making quasi profits by trading with its own members and returning such profits to its members.
The absence of identity between the contributors and participators was quite obvious.
The case of The Maharaj Bag Club Ltd. vs Commissioner of Income tax, C.P. & Berar(2) follows the Dibrugarh Club case and carries the matter no further.
In Commissioners of Inland Revenue vs Stonehaven Recreation Ground Trustees(1) a recreation ground with facilities for tennis, bowls etc. was held on lease and managed.
by 9 trustees.
Admission to the ground was by daily, fort nightly, monthly or season tickets issued to any applicant.
Of the 9 trustees 6 were elected by the season ticket holders and the remaining by the Local Town Council.
The trustees were held assessable as carrying on a trade.
The position of the trustees was akin to that of the owner 'of a proprietary club who carried on the club with a view to earning profits.
(1) [1927]1.L. R. ; A.I.R.192S Cal.
577 ; 2I.T.C.521.
(2) (3) 8 An n. Tax Cas.
307 National Association of Local Government Officers vs Watkins(1) was concerned with an unregistered trade union having for its object the protection of the interest of employees in Local Governments and the promotion of the physical and social welfare of its members.
The Association 2purchased an existing holiday camp to provide cheap holiday facilities for its members.
Bookings were, however, for a short time accepted from non members who had previously used the camp.
By its rules the property of the Association belonged to the members and its profits enured for all members as a whole and not only for those members who used the camp.
The Association contended that its liability should be confined to the profits made from non members.
The Crown claimed, on the other hand, that as the users of the camp were not identifiable with the whole membership there was no mutual trading and the whole of the profits had been properly assessed.
Finley J. gave effect to the contentions of the Association.
The learned Judge laid emphasis on the fact that the Association was not a registered body and that, therefore, the property was the property, not of the Association but of the members themselves and that as the members owned the whole they had a right to participate in the whole and, therefore, there could not be any trade between the Association and a member or any sale to a member.
The two decisions of the Judicial Commissioners ' Court, namely, Commissioner of Income tax, Bombay vs Karachi Chamber of Commerce(1) and Commissioner of Income tax, Bombay vs Karachi Indian Merchants Association(1) were concerned with mutual dealings between members who had put up money for their mutual benefit.
The surplus went to them not as shareholders but as persons who had contributed in excess and was in no sense a profit and could not, therefore, be brought to charge.
(1) , (2) I.L.R. (1940) Ear. 140; (3) ; L/B(D)2SCI 6(a) 308 As already stated, in the instant case there is no mutual dealing between the members inter se and no putting up of a common fund for discharging the common obligations to each other undertaken by the contributors for their mutual benefit.
On the contrary, we have here an incorporated company authorised to carry on an ordinary business of a race course company and that of licensed victuallers and refreshment purveyors and in fact carrying on such a business.
There is no dispute that the dealings of the company with non members take place in the ordinary course of business carried on with a view to earning profits as in any other commercial concern.
It is further admitted that some of the dealings of the company with its members take place in the ordinary course of business and the profits arising out of those dealings, e.g, the fourth item of receipt of Rs. 82,490, are taxable.
The company gives to its members the same or similar amenities as it gives to non members, namely, the use of an unreserved seat in a stand, the facility to watch the races and to bet on the horses in the races, use of the totalisator in that stand and the facility for refreshment.
In fact the daily ticket fee for admission into the Members ' Enclosure is exactly the same as that for admission into the First Enclosure to which the public have access.
The only difference is that a sepa rate enclosure with a separate totalisator is provided for the members where they can meet their fellow members and not be disturbed by the intrusion of non members.
This privi lege is referable to their membership of the company for which they pay an entrance fee on their election as members and for which they pay the periodical subscriptions both of which are not sought to be brought to charge.
The rest of the facilities mentioned above which the members get are in substance the same as those enjoyed by the public.
Those facilities are given to members and non members alike for a price.
The character of the charge made on members is precisely the same as or is similar to that of the charges made on non members, for the company receives moneys from both members and non members in return for the same or similar facilities given to both in the course of one and the 309 same business.
The dealings in both cases disclose the same profit earning motive and are alike tainted with com merciality.
In the circumstances, all the four items of receipts from members must be taken into account in com puting the total income of the company.
In fact that the company has so long enjoyed exemption from taxation is neither here nor there, for there can be no question of acquiring any prescriptive right to exemption from taxation.
The second question need not detain us long.
The answer to that question depends on a true construction of section 10(6) of the Act.
What is the meaning of "a trade or professional or similar association"? Does this company come within any of those descriptions? It is certainly not a professional association.
Learned counsel for the company contends that a "trade association" is not the same thing as a "trading association".
According to Webster 's New Inter national Dictionary, 2nd Edn., page 264 the meaning of a "trade association" is an association of tradesmen, businessmen or manufacturers for the protection and advancement of their common interest.
In our view the company before us is not a "trade association" in this sense although it carries on a business.
In this view of the matter it is unnecessary to discuss the further question whether the facilities or amenities given by the company to its members may be regarded as "services" within the meaning of section 10(6).
We are of opinion that section 10(6) has no application, for the company is not a trade or professional or similar association within the meaning of that sub section.
The result, therefore, is that we hold that all the items of receipts from members referred to in the questions were received by the company from business with its members within the meaning of section 10(1) and that none of them was received by the company as a trade, professional or similar association within the meaning of section 10(6).
In our judgment the High Court should have answered question No. I in the affirmative and question No. 2 in the negative.
310 The appeal is allowed and we award to the Commissioner of Income tax the costs of this appeal and those of the pro ceedings in the High Court.
Appeal allowed.
| The assessee, the Royal Western India Turf Club Ltd. was formed inter alia for the purpose of carrying on the business of a race course company in all its branches and to establish clubs, hotels and other convenience in connection with the property of the company.
It had two classes of members, club members, whose number was limited to 350 and stand members who were elected by ballot.
Every member Paid an entries fee and an annual subscription.
The liability of the members was limited by guarantee and if there was any surplus on winding up, it was to be paid to the members in equal shares.
An admission fee was levied from the members for admission to the Members ' Enclosure, and from non members for admission to the other Enclosures, and in each Enclosure there was a totalisator.
The money 's received from members as well as non members were included in one pool and distributed amongst the holders of the winning tickets.
In each Enclosure refreshments were supplied on payment.
The company admitted that moneys realised from non members were receipts from business and taxable, but contended that the following items of receipts received from members were not assessable to income tax, viz., (1) season 0admission tickets from members, (2) daily admission gate tickets from members, (3) use of private boxes by members (4) income from entries and forfeits received from members whose horses did not run.
The High Court of Bombay held that items 1, 2 and 3 did not fall either under section 10(1) or section 10(6) of the Income tax Act and were therefore not taxable, but item 4 fell within section 10(1) and section 10(6) and was taxable.
The Commissioner of Income tax appealed; Held, (i) that the principles of Styles ' case as explained by subsequent cases had no application to the company as there was no mutual dealing between the members inter se in the nature of mutual insurance and no contribution to a common fund put up for payment of liabilities undertaken by each contributor to the other contributors, and no refund of surplus to the contributors, but on the other hand, the company realised moneys both from the members and non members for the same consideration, namely, by the giving of the same or similar facilities to all alike in the course of one and the same business carried on by it; (ii)that, as the company was formed for carrying on a business it had dealings with its members also in the ordinary course of business, and give the same or similar amenities to members and non members, and there were no mutual dealings between the members or a common fund for the discharge of common obligations to each other, the principle applicable to the surplus of contributions made by members of a club for Providing themselves with amenities was also not applicable to the case; (iii) a "trade association" means an association of tradesmen businessmen or manufacturers for their common protection and advancement, and the assessee was not therefore "a trade or similar association" within section 10(6) of the Income tax Act; 291 (iv) that all the abovementioned 4 item of receipts from members were received by the company from business carried on by it with its members within the meaning of section 10(1) and none of them was received by the company as a trade, profes sional or similar association within the meaning of section 10(6), and ail the items were accordingly assessable to income tax.
The New York Life Insurance Co. vs Styles (Surveyor of Taxes) ; The Cornish Mutual Assurance Co. Ltd. vs The Commissioners of Inland Revenue L. R. ; , Jones vs South Wales Lancashire Coal Owners ' Association Ltd. L. R. Municipal Mutual Insurance Co. Ltd. vs Hills (1932) 16 Tax Cas.
430, English & Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax, Assam [1948] A. C. 405; , Carlisle and Silhoth of Golf Club vs Smith , Royal Calcutta Turf Club vs Secretary of State Cal. 844, United Services Club, Simla vs The Crown Lah 109.
Eccentric Club Case Dibrugarh District Club Ltd. vs Commissioner of Income tax, Assam Cal. 971, The Maharaj Bag Club Ltd. V. Commissioner of income tex, C.P. & Berar, (1931) 5 I.T.C. 201.
Commissioners of Inland Revenue vs Stonehaven Recreation Ground Trustees The National Association of Local Government officers vs Watkins Commissioner of Income tax.
Bombay vs Karachi Chamber of Commerce ; and Commissioner of Income tax.
Bombay vs Karachi Indian Merchants Association , referred to.
|
iminal Appeal No. 34 of 1953.
Appeal from the Judgment and Order dated the 5th January, 1953, of the High Court of Judicature at Allahabad (Lucknow Bench), Lucknow (Kidwai and Bhargava JJ.) in Criminal Appeal Register No. 24 of 1952 and Capital Sentence Register No. 4 of 1952 arising out of the Judgment and Order dated the 19th January 1952, of the Court of the Sessions Judge, Sitapur, in Sessions Case No. 97 of 1951.
Jai Gopal Sethi (K. P. Gupta, with him) for the appellant.
G.C. Mathur and Onkar Nath Srivastava for the respondent.
November 16.
The Judgment of the Court was delivered by BOSE J.
We have three appellants before us.
All were prosecuted for the murder of one Babu Singh.
Of these, Surendra Singh alone was convicted of the murder and was sentenced to death.
The other two were convicted under section 225, Indian Penal Code.
Each was sentenced 331 to three years ' rigorous imprisonment and to a fine of Rs. 200.
All three appealed to the High Court at Allahabad (Lucknow Bench) and the appeal was heard on Filth December, 1952, by Kidwai and Bhargava JJ.
Judgment was reserved.
Before it could be delivered Bhargava J. was transferred to Allahabad.
While there he dictated a, "judgment" purporting to do so on behalf of himself and his brother Judge, that is to say it purported to be a joint judgment : he used the pronoun "we" and not "I".
He signed every page of the "judgment" as well as at the end but did not date it.
He then sent this to Kidwai J. at Lucknow.
He died on 24th December, 1962, before the "judgment" was delivered.
After his death, on 5th January, 1953, his brother Judge Kidwai J. purported to deliver the "judgment" of the court.
He signed it and dated it.
The date he placed on it was 5th January, 1953, Bhargava J. 's signature was still there and anyone reading the judgment and not knowing the facts would conclude that Bhargava J. was a party to the delivery on 5th January, 1953.
The appeal was dismissed and the sentence of death was confirmed.
The question is whether this "judgment" could be validly delivered after the death of one of the two Judges who heard the appeal.
The arguments covered a wide range but we intend to confine ourselves to the facts of this case and only deal with the narrower issues which arise here.
Delivery of judgment is a solemn act which carries with it serious consequences for the person or persons involved.
In a criminal case it often means the difference between freedom and jail, and when there is a conviction with a sentence of imprisonment, it alters the status of a prisoner from an under trial to that of a convict; also the term of his sentence starts from the moment judgment is delivered.
It is therefore necessary to know with certainty exactly when these consequences start to take effect.
For that reason rules have been drawn up to determine the manner in which and the time from when the decision is to take effect and crystal 332 lise into an act which is thereafter final so far as the court delivering the judgment is concerned.
Now these rules are not all the same though, they are designed to achieve the same result.
The Criminal Procedure Code takes care of courts subordinate to the High Court.
Section 366 and 424 deal with them.
The High Courts have power to make their own rules.
The power is now conferred, or rather continued, under article 225 of the Constitution.
The Allahabad High Court framed its present set of Rules in 1952.
They came into force on the 15th of September in that year.
We are concerned with the following in Chapter VII dealing with the judgment and decree, namely rules 1.4.
These rules provide for four different situations: (1) for judgments which are pronounced at once as soon as the case has been heard; (2) for those which are pronounced on some future date, (3) for judgments which are oral, and (4) for those which are written.
These rules use the word "pro nounced" in some places and "delivered" in others.
Counsel tried to make capital out of this and said that a judgment had to be both "pronounced" and "delivered" and that they were two different things.
We do not intend to construe these rules too technically because they are designed, as indeed are all rules, to fur ther the ends of justice and must not be viewed too narrow ly; nor do we desire to curtail the jurisdiction which the Privy Council point out is inherent in courts to make good inherent defects caused by accidents such as death.
As this decision of the Judicial Committee was relied on in the arguments we will quote the passage which is relevant here.
It is at page 295 of Firm Gokal Chand vs Firm Nand Ram(1).
The facts are not the same as here because the judgment was actually delivered in open court and both the judges who constituted the Bench were present and concurred in it.
But before it could be signed, one Judge went on leave.
(1) A.I.R. 1938 P.C. 292.
333 The rules required the judgment to be signed and dated at the time that it was pronounced.
Their Lordships said: "The rule does not say that if its requirements are not complied with the judgment shall be a nullity.
So startling a result would need clear and precise words.
Indeed the rule does not even state any definite time in which it is to be fulfilled.
The time is left to be defined by what is reasonable.
The rule from its very nature is not intended to affect the rights of parties to a judgment.
It is intended to secure certainty in the ascertainment of what the judgment was.
It is a rule which Judges are required to comply with for that object.
No doubt in practice Judges do so comply, as it is their duty to do.
But accidents may happen.
A Judge may die after giving judgment but before he has had a reasonable opportunity to sign it.
The court must have inherent jurisdiction to supply such a defect.
The case of a Judge who has gone on leave before signing the judgment may call for more comment, but even so the convenience of the court and the interest of litigants must prevail.
The defect is merely an irregularity.
But in truth the difficulty is disposed of by sections 99 and 108, Civil Procedure Code.
" That was a civil case.
This is a criminal one.
But section 537 of the Criminal Procedure Code does much the same thing on the criminal side as sections 99 and 108 do on the civil.
The principle underlying them is the same.
But even after every allowance is made and every effort taken to avoid undue technicality the question still remains what is a judgment, for it is the "judgment" which decides the case and affects the rights and liberties of the parties; that is the core of the matter and, as the Privy Council say, the whole purpose of these rules is to secure certainty in the ascertainment of what the judgment was.
The question as sumes more importance than ever in a criminal case because of section 369 of the Criminal Procedure Code which provides that 334 "Save as otherwise provided by this Code or by any other law for the time being in force or, in the case of a High Court, by the Letters Patent or other instrument constituting such High Court, no court, when it has signed its judgment, shall alter or review the same except to correct a clerical error.
" In our opinion, a judgment within the meaning of these sections is the final decision of the court intimated to the parties and to the world at large by formal "pronouncement" or "delivery" in open court.
It is a judicial act which must be performed in a judicial way.
Small irregularities in the manner of pronouncement or the mode of delivery do not matter but the substance of the thing must be there : that can neither be bluffed nor left to inference and con jecture nor can it be vague.
All the rest the manner in which it is to be recorded, the way in which it is to be authenticated the signing and the sealing, all the rules de signed to secure certainty about its content and matter@an be cured; but not the hard core, namely the formal intima tion of the decision and its contents formally declared in a judicial way in open court.
The exact way in which this is clone does not matter.
In some courts the judgment is delivered orally or read out, in some only the operative portion is pronounced, in some the judgment is merely signed after giving notice to the parties and laying the draft on the table for a given number of days for inspection.
An important point therefore arises.
It is evident that the decision which is so pronounced or intimated must be a declaration of the mind of the court as it is at the time of pronouncement.
We lay no stress on the mode or manner of delivery, as that is not of the essence, except to say that it must be done in a judicial way in open court.
But, however, it is done it must be an expression of the mind of the court at the time of delivery.
We say this because that is the first judicial act touching the judgment which the court performs after the hearing.
Everything else up till then is done out of court and is not intended to be the operative act which sets all the consequences which follow 335 on the judgment in motion.
Judges may, and often do, dis cuss the matter among themselves and reach a tentative conclusion.
That is not their judgment.
They may write and exchange drafts.
Those are not the judgments either, how ever heavily and often they may have been signed.
The final operative act is that which is formally declared in open court with the intention of making it the operative decision of the court.
That is what constitutes the "judgment".
Now up to the moment the judgment is delivered Judges have the right to change their mind.
There is a sort of locus paniteniea, and indeed last minute alterations sometimes do occur.
Therefore, however, much a draft judgment may have been signed beforehand, it is nothing but a draft till formally delivered as the judgment of the court.
Only then does it crystallise into a full fledged judgment and become operative.
It follows that the Judge who "delivers" the judgment, or causes it to be delivered by a brother Judge, must be in existence as a member of the court at the moment of delivery so that he can, if necessary, stop delivery and say that he has changed his mind.
There is no need for him to be physically present in court but he must be in existence as a member of the court and be in a position to stop delivery and effect an alteration should there be any last minute change of mind on his part.
If he hands in a draft and signs it and indicates that he intends that to be the final expository of his views it can be assumed that those are still his views at the moment of delivery if he is alive and in a position to change his mind but takes no steps to arrest delivery.
But one cannot assume that he would not have changed his mind if he is no longer in a position to do so.
A Judge 's responsibility is heavy and when a man 's life and liberty hang upon his decision nothing can be left to chance or doubt or conjecture; also, a question of public.
policy is involved.
As we have indicated, it is frequently the practice to send a draft, sometimes a signed draft, to a brother Judge who also heard the case.
This may be merely for his information, or for consideration and criticism.
The mere signing of the 336 draft does not necessarily indicate a closed mind.
We feel it would be against public policy to leave the door open for an investigation whether a draft sent by a Judge was indend ed to embody his final and unalterable opinion or was only intended to be a tentative draft sent with an unwritten understanding that he is free to change his mind should fresh light dawn upon him before the delivery of judgment.
Views similar to this were expressed by a Full Bench of the Calcutta High Court consisting of nine Judges in the year 1867 in Mahomed Akil vs Asadunnissa Bibee(1).
In that case, three of the seven Judges who constituted the Bench handed in signed judgments to the Registrar of the court.
Before the judgment could be delivered, two of them retired and one died.
A Full Bench of nine Judges was convened to consider whether the drafts of those three Judges could be accepted as judgments of the court.
Seton Kerr J., who had heard the case along with them, said "Certainly as far as I can recollect, they appeared to have fully made up their minds on a subject which they had very seriously considered, and on which they had abundant opportunities of forming a final determination.
I am, however.
not prepared to say that they might not on further consideration have changed their opinions. " (p. 13).
Despite this, all nine Judges were unanimous in holding that those three opinions could not be regarded as judgments in the formal sense of the term.
In our opinion, Jackson J. expressed the law aright in these words: "I have however always understood that it was necessary in strict practice that judgments should be delivered and pronounced in open court.
Clearly, we are met today for the first and only time to give judgment in these appeals; and it appears to me, beyond question, that Judges who have died or have retired from the court cannot join in the (1) 9 W.R.I. (F.B.) 337 judgment which is to be delivered today, and express their dissent from it." (p. 5).
Peacock C.J. pointed out at page 30: "The mere arguments and expressions of opinion of individual Judges, who compose a court, are not judgments.
A judgment in the eye of the law is the final decision of the whole court.
It is not because there are nine Judges that there are nine judgments.
When each of the several Judges of whom a simple court is composed separately expresses his opinion when they are all assembled, there is still but one judgment, which is the foundation for one decree.
If it were otherwise, and if each of the memoranda sent in on the present occasion were a judgment, there would be nine judgments in one case, some deciding one thing and some another, and each Judge would have to review his own judgment separately, if a review should be applied for.
" We do not agree with everything which fell from the learned Chief Justice and the other Judges in that case but, in our opinion, the passages given above embody the true rule and succinctly explain the reasons for it.
As soon as the judgment is delivered, that becomes the operative pronouncement of the court.
The law then provides for the manner in which it is to be authenticated and made certain.
The rules regarding this differ but they do not form the essence of the matter and if there is irregularity in carrying them out it is curable.
Thus, if a judgment happens not to be signed and is inadvertently acted on and executed, the proceedings consequent on it would be valid because the judgment, if it can be shown to have been validly delivered, would stand good despite defects in the mode of its subsequent authentication.
After the judgment has been delivered provision is made for review.
One provision is that it can be freely altered or amended or even changed completely without further formality, except notice to the parties and a rehearing on the point of change should that be necessary, provided it has not been signed.
Another is that after signature L/B(D)2SCI 8 338 a review properly so called would lie in civil cases but none in criminal; but the review, when it lies, is only permitted on very narrow grounds.
But in this case the mere fact that a Judge is dead and so cannot review his judgment does not affect the validity of the judgment which has already been delivered and has become effective.
For this reason there is a distinction between judgments which have not been delivered and so have not become operative and those which have.
In the former case, the alteration is out of court.
It is not a judicial act.
It is only part of a process of reaching a final conclusion; also there is no formal public declaration of the Judges ' mind in open court and consequently there is no "judgment ' which can be acted upon.
But after delivery the alteration cannot be made without notice to the parties and the proceeding must take place in open court, and if there is no alteration there is something which is final and conclusive and which can at once be acted upon.
The difference is this.
In the one case, one cannot know, and it would be against public policy to enquire, whether the draft of a judgment is the final conclusion of the Judge or is only a tentative opinion subject to alteration and change.
In the second case, the Judge has publicly declared his mind and cannot therefore change it without notice to the parties and without hearing them afresh when that is necessary; and if there is no change the judgment continues in force.
By change we mean an alteration of the decision and not merely the addition or subtraction of part of the reasoning.
Our conclusion is that the judgment which Kidwa,i J. purported to deliver on 5th January, 1953, was not a valid judgment because the other member of the Bench died before it could be delivered.
The appeal is allowed and the order of the High Court which purports to be its judgment is set aside.
As it is no longer possible for the Bench which heard the appeal and the confirmation proceedings to deliver a valid judgment 339 we send the case back to the High Court for re hearing and delivery of a proper judgment.
November 23.
BOSE J.The order for stay dated the 25th May, 1953, has now expended itself.
The death sentence cannot be carried out as there is no valid decision of the appeal and no valid confirmation.
The position regarding that is as it was when the appeal was, made to the High Court.
The second and the third appellants will surrender to their bail as they are now relegated to the position which they occupied when the appeal was filed in the High Court.
Appeal allowed.
Agent for the appellant : Naunit Lal.
| Where a case was heard by a Bench of two Judges and the judgment was signed by both of them but it was delivered in court by one of them after the death of the other: Held, that there was no valid judgment and the case should be re heard.
A judgment is the final decision of the court intimated to the parties and the world at large by formal "pronouncement or "delivery" in open court and until a judgment is delivered the judges have a right to change their mind.
Firm Gokal Chand vs Firm Nand Ram (A.I.R. and Mahomed Akil vs Asadunnissa Bibee F.B.) referred to.
|
Appeal No. 73 of 1953.
Appeal by special leave against the judgment and Decree dated the 31st January, 1950, of the High Court of judicature at Madras.
(Rao and Nayudu JJ.) in Appeal No. 409 of 1946 arising out of the judgment and Decree dated the 31st January, 1946, of the Court of the Subordinate judge of Bapatla in Original Suit No. 96 of 1944.
(1) 12 Rang.
243 (P.C.) 425 B. Somayya, Senior Advocate (M. Krishna Rao, with him) for the appellant.
D. Munikaniah, Senior Advocate (K. R. Choudhury, with him) for the respondent.
December 8.
The Judgment of the Court was ,delivered by MUKHERJEA J.
This appeal is directed against a Judgment and decree of a Division Bench of the Madras High Court dated the 31st January, 1950, reversing, on appeal, those of the Surbordinate judge, Bapatla, passed in Original Suit No. 96 of 1944.
The suit, out of which the appeal arises, was commenced by the infant plaintiff, now appellant before us, represented by his maternal uncle as next friend, for recovery of possession, on partition, of a half share in the properties described in the schedule to the plaint on the allegation that they were the joint family properties of himself and his father, the defendant No. 1, in which he had an equal share with the latter.
The plaintiff is admittedly the son of defendant No. 2, who is one of the legally married wives of defendant No. 1, but the latter denied that he was the father of the plaintiff and charged the plaintiff 's mother with misconduct.
The defendant No. 3 in the suit, who is the other living wife of defendant No. 1 and has no issue of her own, is alleged to have developed ill feeling and jealousy towards the plaintiff and his mother and poisoned her husband 's mind against them, so much so, that the defendant No. 1 had actually instituted a suit in the Court of the District Munsif at Ongole questioning the legitimacy of the plaintiff.
It was because of such conduct on the part of defendant No. 1 that the present suit had to be instituted.
The defence put forward by defendant No. 1 to the claim of the plaintiff was a denial of his paternity, and the whole controversy in the suit centered round the point as to whether the plaintiff was the legitimate son of defendant No. 1 by defendant No. 2, Ms second wife.
On the admitted facts of the case, there could be no question that the operation of section 112 of the Indian Evidence Act would be attracted and the 426 plaintiff being born during the continuance of a lawful wedlock between his mother and his alleged father, a Conclusive presumption of legitimacy would arise, unless it was proved that the parties to the marriage had no access to each other at any time when he could have been begotten.
The point for determination, therefore, was, whether on the evidence adduced in the case the defendant No. 1, upon whom the burden Of proving non access admittedly lay, had succeeded in discharging that burden.
The trial court decided this point in favour of the plaintiff and against defendant No. 1 and in that view substantially allowed the plaintiff 's claim.
On an appeal being taken against this decision by defendant No. 1 to the Madras High court, the learned Judges, who heard the appeal, came to the opposite conclusion and held that from the facts and circumstances of the case an inference of non access between the husband and the wife could reasonably be drawn.
The result was that the decision of the trial court was reversed and the plaintiff 's suit dismissed.
it is the propriety of this decision of the Madras High Court that is challenged before us on behalf of the plaintiff, to whom special leave to file the appeal in forma pauperis was granted by this court.
It may be stated at the outset that the presumption which section 112 of the Indian Evidence Act contemplates is a conclusive presumption of law which can be displaced only by proof of the particular fact mentioned in the section, namely, non access between the parties to the marriage at a time when, according to the ordinary course of nature the husband could have been the father of the child.
Access and non access again connote, as has been held by the Privy Council (1), existence and non existence of opportunities for marital intercourse.
It is conceded by Mr. Somayya, who appeared on behalf of the plaintiff appellant, that non access could be established not merely by positive or direct evidence; it can be proved undoubtedly like any other physical fact by (1) Vide Karapaya vs Mayandy.
12 Rang 243.
427 evidence, either direct or circumstantial, which is relevant to the issue under the provisions of the Indian Evidence Act, though as the presumption of legitimacy is highly favoured by law it is necessary that proof of non access must be clear and satisfactory.
Mr. Somayya has also not contended seriously before us that the principle of English common law (1), according to which neither a husband nor a wife is permitted to 'give evidence of non access after marriage to bastardise a child born in lawful wedlock, applies to legitimacy proceeding in India.
No such rule is to be found anywhere in the Indian Evidence Act and it may be noted that the old common law doctrine has itself been abrogated in England by the provision of section 7 of the Matrimonial Cause Act, 1950 (2 ).
The position in law being thus made clear, the question for our consideration primarily is whether the learned judges of the High Court came to a correct decision on the facts of the case.
For this purpose, it is necessary to have a clear picture of all the material events as they transpired in evidence, and we will begin with a narrative of the earlier facts about which there is little or no controversyl.
Defendant No. 1 admittedly married three wives.
The first wife died leaving a son aged 2 or 3 years at the time of her death.
The defendant No. I then married the mother if the plaintiff and that was in or about the year 1930.
From the time of this marriage down to about 1940 the couple seemed to have lived quite happily, except that there was no issue of the marriage.
Sometime before June, 1940, the plaintiff 's mother fell ill and was sent to the Government hospital at Guntur for treatment.
Her step son, that is to say, the son of defendant No. 1, by his predeceased wife,.
who was also suffering from certain ailments, at the time, accompanied her to the hospital.
After about a month both of them returned and as defendant No. 2 was medically advised to live separately from her husband for some time she went to her father 's place (1) Vide Russel vs Russel, ; (2)Vide Re Feniot, 428 The son of defendant No. 1 came back to the house ' of his father but his illness grew worse and in June, 1940, he died.
In August, 1940, defendant No. 1 married his third wife who is defendant No. 3 in the suit.
The case of defendant No. 2 is that her husband treated her well for about a year after he married the third defendant but later on grew cold and indifferent and began to neglect her.
She made a grievance of this to her husband, but the latter told her that she might ' go away.
Thereupon the defendant No. 2 did go to her father 's place and on 19th March, 1942, she filed an application in the Court of the District Munsif at Ongole praying for leave to use her husband in forma pauperis for separate maintenance.
There were allegations in the plaint of abandonment and neglect by the husband.
The defendant No. 1 in his answer to this application, which was filed on 7th September, 1942, denied that he neglected his wife, or was in any manner indifferent to her health and comforts.
It was averred that as the petitioner did not bear him any child and the son by his first wife unfortunately died, he had no other alternative but to marry a third wife for the sake of progeny.
It was expressly stated in the counter affidavit that the second wife was living all along in what was described as the mud terraced house and was getting her supply of food and other necessary articles from her husband ; as a matter of fact, after consuming all that she required for herself she was sending the surplus, that remained, to her parents.
It appears that, before this application for leave to 'Sue as a pauper was heard by the court, there was an amicable settlement arrived at between the parties through the mediation of certain well wishers and two documents, namely Exs.
P 5 and P 6, were executed by and between the parties both on the 28th September, 1942.
Exhibit P 5 purports to be a deed of maintenance and under it the husband agreed to pay a sum of Rs. 100 per annum for food and raiment to his second wife during the period of her natural life, the payment to be made by the 30th of Magha Bahula 429 every year.
Certain properties specified in the schedule to this document were kept as security for due payment of these amounts.
The only recitals in this document were that the executant married a third wife as no son was born to him by the second wife, that thereupon the second wife instituted a suit for maintenance against him, and that under the advice of respectable friends the document was executed with the provisions contained therein.
By exhibit P 6, the other document, a residential house, known as the mud terraced house, was given to defendant No. 2 for the purpose of her residence during her lifetime.
The material portion of the document stands as follows : "You are my wife.
Due to the affection I have towards you, I have given to you the property mentioned in the schedule hereunder . and this very day delivered possession of the same to you for your residential purposes for your lifetime.
Hence from now you shall live in the said house and without powers of gift and sale the schedule property shall, after your lifetime, pass to me and my heirs.
" Within a few days after the execution of his document defendant No. 1, on 5th of October, 1942, paid a sum of Rs. 100 to his second wife as maintenance allowance for one year in terms of the maintenance deed exhibit P 5, and the defendant No. 2 acknowledged payment of this money by putting her thumb impression on a receipt which has been marked exhibit D 3 in the suit.
It may be mentioned here that the defendant No. 1 bad sometime before built another house which is described as "tiled house" or "upstair house" and he probably had the intention of removing to that house.
As a matter of fact, however, he did not remove thereto, the ostensible reason assigned being that certain religious ceremonies connected with entering into a new house could not be performed.
It is the case of defendant No. 2 that, after these documents were executed and registered at Addanki, she came back to the mud terraced house and lived there, since then, for several months along with her husband.
During this period she became enceinte and when the 430 time for confinement came, she was taken to the Bayer Hospital at Cherala where on the 16th of October, 1943, she gave birth to the plaintiff.
After delivery, she resided with her child at her father 's house and her husband came there at times to visit them.
When the infant was 7 months old, she ;took him to her husband 's place but her husband asked 'her to remain for some time more with her father.
While staying at her father 's house, she received summons of a suit instituted by her husband (being Suit No. 326 of 1944) in the Court of the District Munsif at Ongole against her praying for cancellation of the maintenance deed and the deed of settlement mentioned above on the ground that she was unchaste and had become pregnant by "immoral ways" and that the son born of her was not his son.
It was after this notice that the present suit was instituted.
As the plaintiff was admittedly born on the 16th of October, 1943, he must have been conceived sometime towards the latter part of December, 1942, or the beginning of January, 1943.
The material point for consideration, therefore, is whether the defendant No. 1 has succeeded in showing that there was no opportunity of access between him and defendant No. 2 during this period ? The defendant No. 1 expressly stated in his deposition that his second wife was a perfectly chaste woman up to the time when the documents Exs.
P 5 and P 6 were executed, and, even when she received the maintenance allowance of Rs. 100 from him in October, 1942.
His specific case is that defendant No.2 did never come to reside with him in the mud terraced house after the compromise was arrived at in the maintenance case.
Where she stayed was unknown to him and he heard that she went to Eddanapudi where she was living an immoral life with her paramour, one Cherakuri Venkanna.
This part of the story of defendant No. 1, has not been, belived by either of the courts below and may be rejected as altogether untrustworthy.
The learned judges of the High Court, although they disbelieved the specific allegation of un chastity made against defendant No. 2 by her husband 431 and did not find that &he was at Eddanapudi at the material period, yet relied on two sets of facts to be noticed presently, as establishing conclusively that defendant No. 2 did not live at the mud terraced house at any time after October, 1942, when she received the sum of Rs. 100 as maintenance allowance for one whole year from, her husband.
The learned judges found, therefore, that there was no opportunity for intercourse between defendant No. 2 and her husband at the period when the boy must have been conceived.
In the first place, the High Court takes the documents Exs.
P 5 and P 6 as amounting to a sort Of separation arrangement under which the parties agreed to live separately from each other and this, according to the learned judges, fully bears out the story of the husband that defendant No. 2 never came to reside in the mud terraced house.
The receipt of a sum of Rs. 100 by defendant No. 2 as advance payment of maintenance allowance for one year on 5th of October, 1942, indicates, according to the learned judges, a final confirmation of the separation arrangement and from this time onwards there was a definite cessation of marital relations between the parties.
The second set of circumstances relied upon by the High Court are the events which happened subsequent to 5th of October, 1940, and which fortify the theory of a sepa ration between the husband and the wife.
It is said that the story of defendant No. 2 that her husband accompanied her to the Bayer Hospital at Chirala when she went there for her confinement is incredible.
It is equally incredible that defendant No. 2 did remain in her father 's house for so long a period after delivery with the consent of her husband.
It would be an extremely unnatural conduct on the part of the husband, according to the High Court, if, as the evidence shows, he refused to recognise his own son when he was taken to him seven months after his birth and there is no explanation as to why he would file a suit for cancellation of the maintenance deed and the deed of settlement, by imputing unchastity to his wife and bastardy to his own son if the story of defendant 432 No. 2 about her previous relations with her husband was true.
In our opinion, the learned judges of the High Court approached the facts of the case from a wrong standpoint altogether and their conclusions are based for the most part upon surmises and speculations and not what was actually proved by the evidence.
There is no warrant, we think, for holding that the documents Exs.
P 5 and P 6 were in the nature of a separation agreement.
Such an inference not only goes against the tenor or the express terms of the documents but is not borne out even by the evidence of the mediators through whose mediation the documents were brought into being or of the persons who were admittedly present at the time when the documents were executed and signed the same as attesting witnesses.
Exhibit P 5, as stated already, simply mentions the fact of the third marriage of defendant No. 1 and the institution of a suit for maintenance by his second wife.
There is nothing in this document which even impliedly suggests that in consideration of receiving an allowance of Rs. 100 a year, the wife agreed to reside separately from her husband.
So far as exhibit P 6 is concerned, the gift is expressly stated to be an affec tionate gift by the husband to the wife and it clearly indicates that it was the intention of the parties that the wife should reside there, and delivery of possession of the house was given to the wife on the very same day that the document was executed.
We do not think that there is any justification for holding that these recitals were false and were not intended to be operative.
D. W. 8, who is one of the attesting witnesses to the documents and was examined on behalf of defendant No. 1, says in his deposition that the documents were read over to the executant and he executed them after consenting to the recitals.
P.W. 5, who was one of the mediators, says that defendant No. 2 used to live in the mud terraced house after compromise.
Unless there is cogent evidence to the contrary and apparently there is no such evidence in the present case we should certainly 433 presume that, the document exhibit P 6 was acted upon and that the possession of the mud terraced house was actually given to defendant No. 2 in accordance with its terms.
The High Court, in its judgment, records a rather curious finding on this point.
"It may be," ' thus the judgment runs, "that even down to exhibit D 3 one may presume that in the very house allotted to her by exhibit P 6 she lived, so that up to the date of exhibit D 3 it may be that there is no impossibility of cohabitation between the parties.
The real trouble arises with reference to the state of affairs after exhibit D 3.
We find in exhibit D 1 1 which is the plaint in O.S. No. 326 of 1944 filed by the present first defendant against the present second defendant for a cancellation of Exs.
P 5 and P 6 that he makes a definite allegation therein that from the time that the plaintiff married his third wife there has not been any bodily connection between him and the defendant.
" The learned judges, in our opinion, misdirected themselves in allowing these statements made by the husband himself in the suit instituted by him nearly two years after the material period, to influence their decision in regard to the effect of exhibit P 6.
Defendant No. 1 definitely admits that his second wife was perfectly chaste at the time when the sum of Rs. 100 was given to her on 5th of October, 1942, and the receipt exhibit D 3 was taken.
There is not a scrap of evidence to show that there was any bitterness of feelings between the parties at that time.
There could be no doubt that the feelings of the husband were changed and had become extremely bitter towards the plaintiff 's mother before he filed the suit for cancellation of the deeds in July, 1944; but the statements made by the husband in the plaint in that suit were made long after the dispute arose between the parties, no matter whatever the reason might be which gave rise to the dispute.
In our opinion, the subsequent conduct of defendant No. 1 or the statements made by him in the suit of 1944 could not be regarded as part of the res gestae and were not admissible as evidence against the plaintiff.
The ,defendant No. 1 could not certainly constitute himself an agent of the plaintiff for the purpose of making 434 admissions against the interest of the latter.
If the story.
of defendant No. 1 that the wife went to Eddanapudi and lived there an immoral life is disbelieved, as it has been disbelieved by the High Court, the conclusion becomes irresistible that she did reside at the mud terraced house as alleged by her and this is fully borne out by the terms of the document exhibit P 6.
There is no evidence of any unnatural conduct on the part of defendant No. 1 towards the plaintiffs mother at about the time when the plaintiff was conceived.
We do not consider it unreasonable, much less unnatural, if the father of defendant No. 2 alone took her to the hospital at Chirala at the time of her delivery and himself bore all the hospital expenses; nor is it a matter to be surprised at if defendant No. 2 after delivery stayed for several months with her infant child in her father 's house.
Apparently for some reason or other, the husband took up an unnatural attitude, but this was a subsequent event and whether he had really any grievance against his wife, or his unnatural behaviour was due to the instigation of his third wife, it is not necessary for us to investi gate.
On the evidence, as it stands, we are clearly of opinion that the defendant No. 1 did not succeed in proving that there was no opportunity for intercourse between him and defendant No. 2 at the time when the plaintiff was conceived.
He rested his whole case upon the allegation of unchastity of the plaintiff 's mother and of the plaintiff being born as the result of fornication.
While rejecting that story, the High Court, in our opinion, erred in holding that there was no opportunity for access between the parties at the material period, relying mainly upon what the husband himself said and did much after the estrangement of feelings took place between the parties, no matter whatever that was due to.
In our opinion, on the evidence in the record thefindings of the High Court cannot possibly stand.
The result is that the appeal 'is allowed, the judgment and decree of the High Court are set aside and those of the trial judge restored.
The plaintiff will have his costs of all the 'courts.
435 The court fees payable to the Government will come out of defendant No. 1 in this case.
We certify for two counsel and an agent in this appeal.
Appeal allowed.
| The presumption under section 112 of the Indian Evidence Act is a conclusive presumption of law which can be displaced only by non access between the parties to the marriage at a time when according to the ordinary course of nature the husband could have been the father of the child.
Access and non access connote existence and non existence of opportunities for marital intercourse.
Karapaya vs Mayandy referred to.
Non access can be proved by evidence direct or circumstantial though the proof of non access must be clear and satisfactory as the presumption of legitimacy is highly favoured by law.
The principle of English common law according to which neither a husband nor a wife is permitted to give evidence of non access after marriage to bastardize a child born in lawful wedlock, does not apply to legitimacy proceedings in India as no such rule is to be found anywhere in the Indian Evidence Act and the old common law doctrine itself has been abrogated in England by the provisions of section 7 of the Matrimonial Cause Act, 1950.
That by the evidence on the record the defendant No. 1 (husband) did not succeed in proving that there was no opportunity for intercourse between him and defendant No. 2 (his wife) at the time when the infant plaintiff was conceived and the High Court erred in holding that there was no opportunity for access between the parties at the material period.
|
Appeal No. 123 of 1952.
Appeal against the Judgment and Order, dated the 22nd March, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) , in Reference No. 2 of 1951 in Civil Rules Nos. 20 and 21 of 1950.
December 11.
The Judgment of the Court was delivered by PATANJALI SASTRI C.J.
This is an appeal from a judgment, of the High Court of Judicature at Calcutta declaring certain provisions of the West Bengal Land Development and Planning Act, 1948, (hereinafter referred to as the "impugned Act ") unconstitutional and void.
The impugned Act was passed on October 1, 1948, primarily for the settlement of immigrants who had migrated into the Province of West Bengal due to communal disturbances in East Bengal,and it 560 provides for the acquisition and development of land for public purposes ' including the purpose aforesaid.
A registered Society called the West Bengal Settlement Kanungoe Co operative Credit Society Ltd., respondent No. 4 herein, was authorised to undertake a development scheme, and the Government of the State of West Bengal, the appellant herein, acquired and made over certain lands to the society for purposes of the development scheme on payment of the estimated cost of the acquisition.
On July 28, 1950, the respondents I to 3, the owners of the lands thus acquired, instituted a suit in the Court of the Subordinate Judge, 11 Court at Alipore, District 24 Parganas, against the society for a declaration that the impugned Act was void as contravening the Constitution and that all the proceedings taken thereunder for the acquisition aforesaid were also void, and of no effect and for other consequential reliefs.
The State of West Bengal was subsequently impleaded as a defendant.
As the suit involved questions of interpretation of the Constitution respondents 1 to 3 also moved the High Court under article 228 of the Constitution to withdraw the suit and determine the constitutional question.
The suit was accordingly transferred to the High Court and the matter was heard by a Division Bench (Trevor Harries C.J. and Banerjee J.) who, by their final judgment, held that the impugned Act as a whole was not .unconstitutional or void save as regards two of the provisions contained in section 8 which, so far as it is material here, runs as follows: "A declaration under section 6 shall be conclusive evidence that the land in respect of which the declaration is made is needed for a public purpose and, after making, such declaration, the Provincial Government may acquire the land and thereupon the provisions of the Land Acquisition Act, 1894, (hereinafter in this section referred to as%, the said Act), shall, so far as may be, apply: Provided that (b) in determining the amount of compensation to be awarded for land acquired in pursuance of this 561 Act the market value referred to in clause first of sub section (1) of section 23 of the said Act shall be deemed to be the market value of the land on the date of publication of the notification under sub section (1) of section 4 for the notified area in which the land is included subject to the following condition, that is to say if such market value exceeds by any amount the market value of the land on the 3 1 st day of December, 1946, on the assumption that the land had been at that date in the state in which it in fact was on the date of publication of the said notification, the amount of such excess shall not be taken into consideration.
" The provision making the declaration of the Government conclusive as to the public nature of the purpose of the acquisition and the limitation of the amount of compensation so as not to exceed the market value of the land on December 31, 1946, were declared ultra vires the Constitution and void.
The Attorney General, appearing for the appellant, rightly conceded that inasmuch as article 31(2) made the existence of a public purpose a necessary condition of acquisition the existence of such a purpose as a fact must be established objectively and the provision in section 8 relating to the conclusiveness of the declaration of Government as to the nature of the purpose of the acquisition must be held unconstitutional but he contended that the provision was saved by article 31(5)of the Constitution which provides: "Nothing in clause (2) shall affect (a) the provisions of any existing _ law other than a law to which the provisions of clause (6) apply, or. . . " Clause (6) reads thus: "Any law of the State enacted not more than eighteen months before the commencement of this Constitution may within three months from such commencement be submitted to the President for his certification; and, thereupon, if the President public notification so certifies, it shall not be called question in any court on the ground that it contract the provisions of clause (2) of this article, 562.
contravened the provisions of sub section (2) of section 299 of the Government of India Act, 1935.
" It was argued that the impugned Act having been passed within 18 months before the commencement of the Constitution and not having been submitted to the President for his certification, it was a law to which the provisions of clause (6) did not apply and, therefore, as an existing law, the impugned Act was not affected by clause (2) of that article.
The argument is manifestly unsound.
Article 31(6) is intended to save a State law enacted within 18 months before the commencement of the Constitution provided the same was certified by the President while, article 31(5) saves all existing laws passed more than 18 months before the commencement of the Constitution.
Reading the two clauses together, the intention is clear that an existing law passed within 18 months before January 26, 1950, is not to be saved unless it was submitted to the President within three months from such date for his certification and was certified by him.
The argument, if accepted, would reduce article 31(6) to ameaningless redundancy.
The only serious controversy in the appeal centred round the constitutionality of the " condition " in proviso (b) to section 8 limiting the compensation payable so as not to exceed the market value of the land on December 31, 1946.
The Attorney General, while conceding that the word " compensation " taken by itself must mean a full and fair money equivalent, urged that, in the context of article 31(2) read with entry No. 42 of List III of the Seventh Schedule, the term was not used in any rigid sense importing equivalence in value but had reference to what the legisla ture might think was a proper indemnity for the loss sustained by the owner.
Article 31(2) provides: No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken sesion of or acquired for public purposes under law authorising the taking of such possession acquisition, unless the law provides for 563 compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given.
and entry 42 of List III reads thus Principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given.
It is argued that the term " compensation " in entry 42 could not mean full cash equivalent, for then, the power conferred on the legislature to lay down the principles on which compensation is to be determined and the form and the manner in which such compensation is to be given would be rendered nugatory.
On the other hand, the entry showed that the compensation to be "given " was only " such compensation " as was determined on the principles.
laid down by the law enacted in exercise of the power, and, as the concluding words used in article 31(2) are substantially the same as in the entry, the Constitution, it was claimed, left scope for legislative discretion in determining the measure of the indemnity.
We are unable to agree with this view.
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 compensation, 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 74 564 to be neglected, is a justiciable issue to be adjudicated by the court.
This, indeed, was not disputed.
Reference was made to certain Australian cases where the opinion was expressed that the terms of compulsory acquisition of property were matters of legislative policy and judgment.
The decisions largely turned on the absence of any constitutional prohibition in regard to deprivation of private property without compensation as in the Fifth Amendment of the American Constitution and on the use of the words " just terms " instead of " compensation " in section 51 (xxxi) of the Commonwealth Constitution which conferred power on the Parliament to make laws with respect to " the acquisition of property on just terms from any State or person. . " (cf.
Grace Brothers Pty. Ltd. vs The Commonwealth(1).
Those decisions, therefore, are of no assistance to the appellant here.
Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market value of the land on December 31, 1946, no matter when the land is acquired.
Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came in.
to force, the fixing of the market value on December 31,1946, as the ceiling on compensat I ion, without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirement of article 31 (2).
The fixing of an anterior date for the ascertainment of value may not, in certain circumstances, be a violation of the constitutional requirement as, for instance, when the proposed scheme of acquisition becomes known before it is launched and prices rise sharply in anticipation of the benefits to be derived under it, but the fixing of an anterior date, which might have no relation to the value of the land when it is acquired, may be, many years later, cannot but be regarded as arbitrary.
The learned Judges (1) ; 565 below observe that it is common knowledge that since the end of the war land, particularly around Calcutta, has increased enormously in value and might still further increase very considerably in value when the pace of industrialisation increases.
Any principle for determining compensation which denies to the owner this increment in value cannot result in the ascertainment of the true equivalent of the land appropriated.
We accordingly hold that the latter part of proviso (b) to section 8 of the impugned Act which fixes the market value on December 31, 1946, as the maximum compensation for lands acquired under it offends against the provisions of article 31 (2) and is unconstitutional and void.
The appeal is dismissed with costs.
Appeal dismissed.
Agent for respondents Nos. 1, 2 and 3: section C. Banerjee.
Agent for the intervener: G. H. Rajadhyaksha.
| The West Bengal Land Development and Planning Act, 1948, passed primarily for the settlement of immigrants who had migrated into West Bengal due to communal disturbances in East Bengal provides for the acquisition and development of land for public purposes including the purpose aforesaid: Held, that the provisions of section 8 of the West Bengal Act XXI of 1948 making the declaration of the Government.
conclusive as to the public nature of the purpose of the acquisition and the limitation of the amount of compensation so as not to exceed the market value of the land on December 31, 1946, are ultra vires the Constitution and void 559 (i)inasmuch as article 31(2) of the Constitution made the existence of a public purpose a necessary condition of acquisition, the existence of such a purpose as a fact must be established objectively ; (ii)that in view of the fact that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946, as the coiling on compensation without reference to the value of the land at the time of acquisition, is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirements of article 31(2) (iii)the Act is not saved by article 31(5) from the operation of article 31(2) as it was not certified by the President as provided for by article 31(6).
Held, further, that while entry No. 42 of List III of the Seventh Schedule confers on the legislature the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner of the property appropriated, article 31(2) requires that such principles must ensure that what is determined as payable must be "compensation", that is, a just equivalent of what the owner has been deprived of.
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.
|
o. 296 of 1951.
Appeal against the Judgment and Order dated the 16th January, 1951, of the High Court of Judicature for the State of Rajasthan at Jodhpur (Nawal Kishore and Kanwar Lal Bapna JJ.) in D. B. Civil Miscellaneous Case No. 15 of 1950.
M. C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the appellant.
N.C. Chatterjee, Senior Advocate (G. L. Agarwal, with him) for the respondent.
December 16.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
This is an appeal from an order of the High Court of Rajasthan directing by writ issued under article 226 of the Constitution that the Union of India, appellant herein, should not levy income tax on the income of the respondent accruing, arising or received in Rajasthan (excluding the area of the former covenanting State of Bundi) prior to April 1, 1950.
The respondent resides and carries on business in the District of Jodhpur in Rajasthan which is one of the States specified in Part B of the First Schedule to the Constitution (hereinafter referred to as Part B States).
In May, 1950, the respondent was required to file a return of his income for the previous year, that is the year ending March 31, 1950, for assessment to income tax, and subsequently was also asked to produce the relevant account books before the Income tax Officer, Jodhpur, on August 11, 1950.
Thereupon the respondent presented the petition, out of which this appeal arises, on August 23, 1950, invoking the, jurisdiction of the High Court under article 226 of the Constitution for the issue of "a writ of mandamus or certiorari or other appropriate writ"directing the appellant not to take a any action under the Indian Income tax Act, 1922, (hereinafter referred to as the Indian Act) as amended by the Indian Finance Act, 1950, for the assessment or levy 544 of income tax on the income which accrued or arose to the respondent or was received by him prior to April 1, 1950, on the ground that such income was not liable to be charged "under the provisions of any law validly in force in Rajasthan.
" The petition was heard by a Division Bench of the High Court (Nawal Kishore and Kanwarlal Bapna JJ.) who accepted the petition and issued a writ as already stated, overruling sundry preliminary objections to which no reference need be made as they have not been raised by the appellant before us.
As is well known, after the Indian Independence Act, 1947, came into force, various Indian States (as they were then known) which had been recognised, subject to certain restrictions and limitations not material here, as independent principalities were brought into the Dominion of India from, time to time under arrangements with their Rulers, and this process of accession and integration .
resulted in the expansion of the territory of India in successive stages.
So far as Rajasthan is concerned, the Rajaputana States, as they were then called, integrated their territories into the United State of Rajasthan, and the new State acceded to the Dominion of India by an Instrument of Accession executed by the head of the State (Rajpramukh) on April 15, 1949, and accepted by the Governor General of India on May 12, 1949.
By clause (3) of the Instrument the Rajpramukh accepted "all matters enumerated in Lists I and III of the Seventh Schedule to the Act (the Government of India Act, 1935) as matters in respect of which the ]Dominion Legislature may make laws for the United State, provided that nothing contained in the said Lists or in any other provisions of the Act shall be deemed to empower the Dominion Legislature to impose any tax or duty in the territories of the United State or prohibit the imposition of any duty or tax by the Legislature of the United State in the said territories.": This limitation on the power of the Dominion Legislature thus imposed by agreement between the two States was given effect to as a 545 constitutional limitation by section 101 of the Government of India Act, 1935, as adapted by the Governor General in August, 1949, in exercise of the powers conferred on him by the Indian Independence Act, 1947.
That section provided that "nothing in this Act shall be co nstrued as empowering the Dominion Legislature to make laws for an acceding State otherwise than in accordance with the Instrument of Accession of that State and any limitations contained therein.
" The position thus was that the Dominion Legislature had no power to make any law imposing any tax or duty in the territories of the United State of Rajasthan.
In July, 1949, however, the.
Indian States Finances Enquiry Committee appointed by the Government of India submitted their report recommending, among other things, the financial integration of the acceding States and the imposition of the Indian income tax in their territories as from the first day of April, 1950.
Meanwhile the framing of the Constitution of India by the Constituent Assembly, which also included duly appointed representatives of the acceding States, was Hearing completion, and in November, 1949, the Rajpramukh, in exercise of his powers as the duly constituted head of the State, issued a Proclamation whereby he declared and directed that the "Constitution of India shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the Rajasthan State as for the other parts of India, and shall be enforced as such in accordance with the tenor of its provisions and that the provisions of the said Constitution shall, as from the date of its commencement, supersede and abrogate all other constitutional provisions inconsistent therewith which are at present in force in this State.
" The Constitution of India then came into force on January 26, 1950.
It repealed the Government of India Act, 1935, including section 101 thereof, and brought all the Part B States, including Rajasthan, within the Union of India, incorporating the territories of all those States in the "territory of India" as defined in article 1 (2).
It created a new Central 546 Legislature for the Union called Parliament and empowered that Legislature by article 245 "to make laws for the whole or any part of the territory of India" subject to the provisions of the Constitution and, by article 246 (1) read with entry No. 82 of List 1, it conferred "exclusive power" to make laws with respect to"taxes on income other than agricultural income".
In exercise of that power and pursuant to there commendation of the Indian States Finances Enquiry Committee referred to above, Parliament enacted the Finance Act, 1950 (Act XXV of 1950) providing by section 2 (1) that income tax and super tax shall be charged "for the year beginning on the first day of April, 1950," (i.e., 1950 51) at the rates specified in Parts I and 11 respectively of the First Schedule to that Act.
Section 3 made certain amend ments in the Indian Act "with effect from the first day of April, 1950.
" Among these was the substitution of the present clause (14 A) in section 2 in the place of clause (14 A) as it stood before.
The new clause defines " taxable territories " as respects different periods so as to correspond to the successive stages of expansion of the territory of India after the Indian Independence Act, 1947.
The material part of that clause as amended runs thus: (14 A) I taxable territories ' means .
(a). . (b). . (c). (d)as respects any period after the 31st day of March, 1950, and before the 13th day of April, 1950, the territory of India excluding the State of Jammu and Kashmir and the Patiala and East Punjab States Union, and (e) as respect any period after the 12th day of April, 1950, the territory of India excluding the State of Jammu and Kashmir: Provided that the taxable territories shall be deem ed to include (a). 547 (b)the whole of the territory of India excluding the State of Jammu and Kashmir (i) as respects any period, for the purposes of sections4 A and 4 B, (ii) as respects any period after the 31st day of March, 1950, for any of the purposes of this Act, and (iii)as respects any period included in the previous yearfor the.purpose of making any assessment of the yearending on the 31st day of March, 1951, or for any subsequent year.
" The definition, it may be observed in passing, is by no means a model of perspicuity.
Parts of it seem redundant and even mutually contradictory.
For instance, (leaving out the State of Jammu and Kashmir altogether in this discussion) whereas clause (d) excludes the Patiala and the East Punjab States Union from the taxable territories as respects the period from April 1, 1950, to April 12, 1950, subclause (ii) of clause (b) of the proviso would seem to include that State also within such territories as respects the same period, and while clauses (d) and (e) of the substantive part of the definition when read together seem apt by themselves to bring the territory of India within the taxable territories as respects the period after March 31, 1950, sub clause (ii) of clause (b) of the proviso apparently seeks to bring about the same result by means of a fiction.
Now, the scheme of the Indian Act is to tax a person resident in the taxable territories during the previous year on all his income of the previous year whether accruing within or without the taxable territories, and to tax a person not resident in the taxable territories upon his income accruing within the taxable territories during the previous year.
Residence in the taxable territories has to be determined in accordance with the provisions of section 4 A which, in the case of an individual, takes into account his having been in such territories within the five years preceding the year of assessment.
If Rajasthan was a taxable territory in the year 1949 50, the respondent would be chargeable in 72 548 respect of his income whether derived within or without .Rajasthan.
It is, however, argued on his behalf by Mr. Chatterjee that section 3 of the Finance Act, 1950, having substituted the amended clause .(14
A) " with effect from the first day of April, 1950," Rajasthan was not a taxable territory during the accounting year 1949 50, and that no income tax being admittedly leviable in that State on the income accruing there in that year, the new clause (14 A) should not be construed so as to impose liability to pay Indian incometax on such income.
According to learned counsel the word "assessment" in sub clause (iii) of clause (b) of the proviso must be taken to mean only computation of income and not the imposition of liability.
In support of the construction he relied on the decision of the Privy Council in Commissioner of Income tax, Bombay vs Khemchand Ramdas(1) where it was said that the word "assessment" was used in the Indian Income tax Act as meaning "sometimes the computation of income, sometimes the determination of tax payable and sometimes the whole procedure laid down in the Act for imposing liability on the taxpayer." Mr. Chatterjee reinforced the argument by referring to the repealing and saving provisions of section 13 which he read as keeping alive a State law of incometax in.force in any Part B State "for the purposes of levy, assessment and collection of tax" not only in respect of the income of the year 1948 49 but also on the income of,1949 50 which is the previous year for assessment for the year ending March 31, 1951 (i.e., 1950 51).
The result, therefore, according to him, was that where any State law of income tax was in force in any Part B State before April 1, 1950, so as to make the income of 1949 50 chargeable to tax, the amended clause (14 A) authorised the computation of such income for the purpose of taxation as, for example, in the State of Bundi.
But where, as in the rest of the territory of Rajasthan, no income tax was leviable on the income of the year 1949 50, the amendment by the Finance Act, 1950, which took effect only from April 1, 1950, did not, on its true construction, bring (1) I.L.R. 549 the income of the year 1949 50 into charge under the Indian Act.
This argument found favour with the learned Judges in the High Court but we are unable to accept it.
A short answer to it is provided by sub clause (i) of clause (b) of the proviso under which the whole of the territory of India including Rajasthan is to be deemed taxable territory for the purpose of section 4 A of the Indian Act "as respects any period.
" The words "any period" cannot be taken to mean "any period after March 31, 1950," for the period referred to in the next clause is expressly limited in that sense. ' Those limiting words cannot be read into sub clause (i) which must, therefore, be understood as referring to any period before or after March 31, 1950.
As already indicated, residence in the taxable territories within the meaning of section 4 A can, in some cases, relate back to as many as five years before the year of assessment, and that is obviously the reason why the period mentioned in sub claure (i) is not limited as in sub clause (iii) of clause (b) of the proviso.
Indeed, if the words "any period" id sub clause (i) were intended to mean any period after March 31, 1950, that sub clause of the proviso which enacts a fiction, would be wholly unnecessary, for clauses (d) and (e) of the substantive part of the definition taken together clearly have the effect, as already stated, of making the territory of India a taxable territory , during that period.
If Rajasthan was thus a part of the taxable territories during such period preceding the assessment year, 1950 51, as would be necessary to make the respondent "resident" in such territories within the meaning of section 4 A, then the income accruing or.
arising, to him in Rajasthan during the year 1949 50 would be taxable though, Rajasthan was not part of the taxable territories in that year, for, in the case of a person resident in the taxable territories, income accruing or arising to him without the taxable territories is also chargeable to tax under section 4, sub section (1) clause @b) sub clause.(ii) of the Indian Act.
This aspect of the matter does not appear to have been sufficiently 550 appreciated in the court below.
The learned Judges say: "The first clause in proviso (b) means to say that the earlier residence in Part B States will be taken to be residence in taxable territories while taking account of the residence for a certain prior period." Having thus correctly construed the clause, they failed to realise its effect on the operation of section 4 (1) (b) (ii), for they proceeded to consider the construction of proviso (b) (iii) observing: "The next important question calling for determination is whether Rajasthan became taxable territory during the financial year in this case, i.e., 1949 50, for, if the answer is in the negative, the petitioner must be held to be ' Immune from liability to assessment on the income of that year.
" This, as pointed out above, is a misconception.
It may well be that proviso (b) (iii) was designed to bring the income,, profits and gains of the year 1949 50 into charge under section 4 (1) (a) and section 4(1) (c), in which cases receipt or accrual, as the case may be,, in the taxable territories is the test of chargeability.
it may be mentioned here that the exemption from tax under section 14 (2) (c) of the Indian Act of income accruing within Part B States was abrogated, except as regards the State of Jammu and Kashmir, by the amendment of that provision with effect from the first day of April, 1950.
Even assuming it were necessary for the Revenue to bring the case within proviso (b) (iii) in order to sustain the charge on the respondent 's income accruing in Rajasthan during the year 1949 50, we are of opinion that the construction, placed by the learned Judges on that clause cannot be supported.
They assume that proviso (b) (iii) is a provision authorising assessment of income tax, and proceed to discuss what the word " 'assessment" in that context should be taken to mean.
Charge of income to tax and its computation are matters governed by other provisions of the Indian Act.
All that section 2 (14 A) does is to define what the expression "taxable territories" means in certain cases and for certain purposes wherever that expression is used in the various provisions of the Indian Act.
551 And as the expression is used in the charging section 4 in connection with the conditions which are to determine liability to tax, sub clause (iii) of clause (b) of the definition must, when read with section 4 of the Indian Act, have reference to chargeability of income.
The result is that sections 3 and 4 of the Indian Act read in the light of the definition in proviso (b) to the amended section 2 (14 A) and section 2 of the Indian Finance Act, 1950, authorise the imposition of the Indian income tax and super tax on the income derived 'by the respondent in they are 1949 50 in the territory of Rajasthan.
As already observed, the learned Judges below, in order to reinforce their construction of sub clause (iii) of clause (b) of the proviso, read section 13 of the Finance Act as keeping alive the law of income tax in force in any Part B State for purposes of levy, assessment, and collection of tax in respect of the income of 1949 50.
This, in our opinion, is not the effect of section 13 on its true construction.
After referring to the decision of the Privy Council to which reference has been made, the learned Judges say "There are three stages in connection with the imposition of a tax.
The first is the declaration of liability, the second is the assessment and the third is the collection.
This clause makes the territory a taxable territory for the purpose of making any assessment but not for the purpose of chargeability.
The chargeability is left to arise by some other law and that law is the previous State law referred to in section 13, Finance Act, 1950.
It arises in a twofold manner.
In the first place, under section 6 of the General Clauses Act the repeal of the State law as from April 1, 1950 did not affect any liability incurred under the repealed enactment and secondly, though the language used in section 13 is very complicated, a careful perusal makes it clear that the State law is not only kept alive for the purpose of levy, assessment and collection of, incometax the income of the year 1949 50, but also for the above purposes in the subsequent year.
The previous year.
in relation to the, subsequent year 1951 52 is the 552 year 1950 51 and the period not included therein would be the year 1949 50 and the State law is directed to apply if the income remains untaxed under the Indian law. .
Therefore if somebody is liable to income tax in any territory where such law was in force prior to April 1, 1950, but certain period has not been included while assessing him to income tax but the chargeability existed, the proviso (b) (iii) would become applicable for such period as he was not charged but the liability had accrued, and the territory would become taxable territory for the purpose of making any assessment of the year 1950 51.
It will be seen that the basis on which this reasoning proceeds is that section 13 of the Finance Act, 1950, ,saves the operation of the States laws relating to income tax in Part B States in the year 1949 50 for the purpose of levy, assessment and collection, and it is those laws that imposed the liability to tax on the income accruing in those States during that, year.
This is a misapprehension of the true meaning and effect of section l3.
That section, so far as it is material here, runs thus: "Repeal and savings. (1) If immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch Behar any law relating to income tax or supertax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act,, 1922, for, the year ending on the 31st day of March, 1951, or, for any subsequent year. . .A close reading of that provision will show that it saves the operaton of the State law only in respect of 1948 49 or any earlier period 'which is the period not included in the previous year (1949 50) for the purposes of asessment for the year 1950 51.
In other words, there remained no State law of income tax in operation, in any Part B State in the year 1949 50, No doubt, 553 there is the phrase "or for any subsequent year" immediately following the words "for the year ending on the 31st day of March, 1951.
" Relying on that phrase, the learned Judges argue thus : Take the "subsequent year" 1951 52.
The previous year for making an assessment for that year would 'be 1950 51.
The year 1949 50 "is a period not included" in that previous year.
Therefore, section 13 saves the operation of any law relating to income tax in force in any Part B State in 1949 50 "for the purposes of the levy, assessment and collection of income tax and super tax in respect of that period," that is to say, the income accruing in 1949 50 in a Part B State continues to be chargeable under the State law.
But the learned Judges failed to see that, on this reasoning, the same thing could be said of the income of 1950 51, 1951 52, etc.
if you take the "subsequent year" to be 1952 53, 1953 54, etc.
and work backwards.
On this construction of section 13, the State law of income tax would continue to operate for an indefinite period even after the commencement of the Constitution during which period the Indian income tax and super tax would be leviable.
In other words, the State law of income tax in Part B States for the levy, assessment and collection would be in operation side by side with the Indian Act even after the financial integration of those States with the Indian Union a result manifestly repugnant to the policy underlying the Finance Act, 1950.
No argument, therefore, could be logically based on the words "or for any subsequent period", which evidently were added with a view to catch the income of any broken.
period prior to April 1, 1950, which might otherwise escape assessment both under the repealed.
State law and the newly introduced Indian Act.
Nor can section 6 of the General Clauses.
Act, 1897, serve to keep alive the liability to pay tax on the income of the year 1949 50 assuming it to have accrued under the repealed State law, for a "different intention" clearly appears in sections 2 and 13 of the Finance Act read together as indicated above.
In any case no question of keeping any such liability alive could arise in the present case as admittedly no State law of 554 income tax was in operation in the territory of Rajasthan, except the former State of Bundi.
On this view the whole basis of the reasoning of the learned Judges below falls to the ground.
Even so, it was contended, the Finance Act, 1950, in so far as it purports to authorise such levy is ultra vires and void as Parliament was not competent under the Constitution to make such a law.
The argument was put in two ways.
In the first place, it was said broadly that as the Constitution could not operate retrospectively as held by this court in Kesava Madhava Menon 's case(1), the power of legislation conferred by the Constitution upon Parliament could not extend so as to charge retrospectively the income accruing a prior to the commencement of the Constitu is a fallacy.
While it is true that the tion.
This Constitution has no retrospective operation, except where a different intention clearly appears, it is not correct 'to say that in bringing into existence new Legislatures and conferring on them, certain powers of legislation, the Constitution operated retrospectively.
The legislative powers conferred upon Parliament under article 245 an article 246 read with List I of the Seventh Schedule could obviously be exercised only after the Constitution came into force and no retro spective operation of the Constitution is involved in the conferment of those powers.
But it is a different thing to say that Parliament in exercising the powers thus acquired is precluded from making a retroactive law.
The question must depend upon the scope of the powers conferred, and that must be determined with reference by which, affirmatively, to the "terms of the instrument the legislative powers were created and by which, negatively, ' they were restricted": [Queen vs Burah (2)].
Article 245 of the Constitution enacts that subject to its provisions Parliament may make laws for the whole or any part of the territory of India and article 246 proceeds to distribute legislative powers as between Parliament and the State Legislatures in the (1) ; (2) 51.A. 178, 555 country.
Thus, these articles read with entry No. 82 of List I of the Seventh Schedule empower Parliament to make laws with respect to taxes on income for the whole of the territory of India, and no limitation or restriction is imposed in regard to retroactive legislation.
It is, therefore, competent for Parliament to.
make a law imposing a tax on the income of any year prior to the commencement of the Constitution.
It was said, however, that the line of decisions like, Queen vs Burah(1), which defined the powers of legislatures created by the British Parliament, could have no application to the Union Parliament which came into life as a new legislature on the commencement of the Indian Constitution.
It could not be assumed that such a legislature had the power of making a law having retrospective operation in relation to a perio prior to its birth unless the Constitution itself clearly and explicitly conferred such power.
In support of this argument certain observations of one of the Judges in an Australian case [Exparte Walsh and Johnson ; In re Yates(2)] were relied on.
We are unable to accept the argument.
Our Constitution, as appears from the Preamble, derives its authority from the people of India, and learned counsel conceded that it was open to the people to confer on the legislatures established by the Constitution, which they framed through their representatives, power to make laws having operation in relation to periods prior to the commencement of the Constitution.
But, it was insisted, such a power should be given in clearly expressed terms.
There is, however, no question here of the Constitution operating retrospectively in bringing into existence the Union Parliament or the legislatures of the States.
The only question is 'What powers have been conferred upon these legislatures by the representatives of the people who framed the Constitution and, in determining that issue, the principles laid down in cases.
like Queen vs
Burah (1) apply in full foree.
The observations in the Australian case, to which reference has been made, seem to us (1) 5 I.A. 178.
(2) ; , at pp 80, 81, 73 556 to go too far and cannot be accepted as sound constitutional doctrine.
Nor can it be said, in strictness, that the Finance Act, 1950, is retroactive legislation.
That Act, as already noticed, purports by section 2 to charge income tax and super tax at specified rates "for the year beginning on the last day of April, 1950".
The case,is thus one where the statute purports to operate only prospectively, but such operation has, under the scheme of the Indian income tax law, to take into account income earned before the statute came into force.
Such an enactment cannot, strictly speaking, be said to be retroactive legislation, though its operation may affect acts done in the past.
Dealing with a statute authorising the removal of destitute widows from a parish, it was observed in an English case [Queen vs St. Mary, Whitechapel(1) 1: "It was said that the operation of the statute is confined to persons who have become widows after the Act was passed and that the presumption against a retrospective statute being intended supported this construction.
But we have before shown that the statute is in its direct operation prospective as it relates to future removals only and that it is not properly called a retrospective statute because a part of the requisites for its action is drawn from time antecedent to its passing.
" It is, however, unnessary to pursue this aspect of the matter further as we have held that Parliament has the power to make retroactive laws.
Secondly, it was said that section 101 of the Government of India Act, 1935, which gave effect to the stipulation in the Instrument of Accession against the imposition by the Dominion Legislature.
of any tax or duty in the territory of the United State of Rajasthan, was kept alive, notwithstanding its repeal by article 395 of the Constitution, by section 6 of the , [which is made applicable to the interpretation of the Constitution by article 367 (1)] as a " right" or "privilege" acquired under the repealed enactment, and so (1) (1848) i2 Q.B. 120,127; ii6 E.R. 8ii, 814. 557 continued to operate under article 372 (1) as a con stitutional limitation on the power of Parliament, with the result that Parliament had no power to impose tax contrary to section 101 of the Government of India Act, 1935.
The argument is somewhat ingenious but there are obvious difficulties in the way of its acceptance.
For one thing, section 101 of the Government of India Act, 1935, created no right or privilege in the subjects of the United State of Rajasthan which, notwithstanding the repeal of that section, could be regarded as still enuring for their benefit.
Section 101 merely imposed a restriction upon the power of the Dominion Legislature to make laws for an acceding State inconsistent with the stipulations contained in the Instrument of Accession.
When that section along with the rest of the Government of India Act, 1935, was repealed by the new Constitution, which has created new legislatures with power to make retroactive laws, it is idle to suggest that rights or privileges acquired while the old Constitution Act was in force are preserved for ever for that must be the result of the argument by section 6 of the General Clauses Act, which can have no application to such cases.
Furthermore, it will be recalled that the Proclamation made by the Rajpramukh as Ruler of Rajasthan on 23rd November, 1949, declared and directed that the Constitution of India when brought into force "shall be the Constitution for the Rajasthan State" and it expressly "superseded and abrogated all other constitutional provisions inconsistent therewith" which were then in force.
The competency of the Rajpramukh as the Ruler of the State to accept the Constitution of India as governing that State also was not challenged before us, and it is manifest that, after such declaration and direction, no I restriction imposed on the Dominion Legislature by the Instrument of Accession and enforced by section 101 of the Government of India Act could prevail against the legislative powers conferred on Parliament by the Constitution of India.
The difference in the constitutional position which previously existed between the Provinces and the acceding: States has thus 558 disappeared except, of course, in regard to matters in which such distinction has been preserved by the Constitution itself, e.g., by article 238 and article 371.
It follows that the amendment of section ' 2 clause (14 A) of the Indian Act, by the Finance Act, 1950, so as to authorise the levy of tax on income accruing in the territory of Rajasthan in the year 1949 50 is within the competence of Parliament and therefore valid.
We accordingly allow the appeal, and set aside the judgment of the High Court.
We make no order as to costs.
Appeal allowed.
| Respondent was residing and carrying on business in the District of Jodhpur in Rajasthan, a Part B State,.
His income arising therein during the accounting year 1949 50 was sought to assessed to income tax 'for the year 1950 51 under the Indian Income tax Act 'as amended by the Indian Finance Act.
He presented ' a petition under article 226 to the High Court praying 542 for the issue of a writ directing the Union of India not to assess income tax on his income which had accrued to him prior to April 1, 1950, because no income tax was leviable in Rajasthan (except in the State of Bundi) under any provision of law in force there.
The High Court having accepted his petition, the Union of India preferred the present appeal to the Supreme Court.
Section 3 of the Finance Act 1950 (Act XXV of 1550) made certain amendments in the Indian Income tax Act with effect from the 1st day of April, 1950" and substituted therein the present el.
(14 A) in section 2 in place of previous el.
(14 A) defining "taxable territories".
Held, that under sub el.
(i) of el.
(b) of the proviso, the whole of the territory of India including Rajasthan is to be deemed taxable territory for the purpose of section 4 A of the Indian Income tax Act "as respects any period" The words "any period" mean any period before or after March 31, 1950.
Respondent was therefore resident in the taxable territories during the accounting year 1949 50 and his income, whetherderived within or without the taxable territories was taxable under section 4 sub section
(I) cl.
(b) sub el.
(ii) of the Indian Income tax Act.
Further, all that section 2 (14 A) does is to define what the ex pression "taxable territories" means in certain cases and for certain purposes.
wherever that expression is used in the various provisions of the Indian Income tax Act, and as the expression is used in the charging section 4 in connection with the conditions which are to determine liability to tax, sub el.
(iii) of cl.
(b) of the definition must, when read with section 4 of the Indian Income tax Act, have reference to chargeabiiity of income and not merely to its computation, and therefore sections 3 and 4 of the Indian Income tax Act read in the light of the definition in proviso (b) to the amended section Y. (14 A) and section 2 of the I inance Act, 1950, authorise the imposition of Indian income tax and super tax on the income derived by the respondent in the year 1949 50 in the territory of Rajasthan.
Held also, that while it is true that the Constitution has no restrospective operation except where a different intention clearly appears, it is not correct to say that in bringing into existence now legislatures and conferring on them certain powers of legislation, the Constitution operated retrospectively.
Articles 245 and 246 reda with entry No. 82 of List I of the Seventh Schedule empower Parliament to make laws with to taxes on income for the whole territory of India and limitation or restriction is imposed in regard to retroactive legislation &ad it is, therefore competent for Parliament to make a law imposing a tax on the income of any year prior to the the amendment of section 2, cl (14 A) of the Indian income tax Act by the Finance act by the Finance act the Indian Income tax Act by the Finance ,1950, so as to the authorise the levy of the authorise the levy of tax on income accuring in the territory of Rajasthan in the year 1949 50 ie therefore valid.
|
Appeals Nos. 209 and 210 of 1953.
Appeals by special leave against the Judgment and Orders dated 4th April, 1953, of the High Court of Judicature of Mysore at Bangalore (Medapa C. J. and Vasudevamurthy J.) in Civil Petitions Nos, 20 and 21 of 1953, 538 M.Ramaswamy, Senior Advorate, (B. Neelakanta, with him) for the appellant.
M. C. Setalvad, Attorney General for India, (Porus A. Mehta, with him) for the respondent.
1953 .
December 16.
The Judgment of the Court was delivered by PATANJALI SASTRI C. J.
These two connected appeals arise out of applications made to the High Court of Judicature at Bangalore under article 226 of the Constitution challenging the jurisdiction of the Income tax Officer, Special Survey Circle, Bangalore, to assess the appellant to income tax and super tax on his income accruing prior to April 1, 1950, in the State of Mysore and praying for the issue of appropriate writs in that behalf.
The applications were dismissed by the court and leave to appeal having been refused, the appellant has brought these appeals by special leave of this court.
It is a matter of admission that the officer making the assessments was an officer Appointed under the Indian Income tax Act,, 1922, and that in making such assessments he was applying the income tax law in force in the State of Mysore down to the end of the year of account 1948 49.
The officer was exercising jurisdiction in the State by virtue of the proviso to section 13 of the Indian Finance Act, 1950, which reads as follows: Repeals and Savings. (1) If immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch Behar any law relating to income tax or super tax or tax on profits of business, that law shall cease to have effect except for the purposes of.
the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922, for the year ending on the 31st day of March, 1951, or for any subsequent year or, as the case may be, the levy, assessment and 539 collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949: Provided that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or court is, the decision of the Central Government thereon shall be final.
It is contended that the proviso is ultra vires and void as the Union Parliament had no power to make a law authorising any officer or authority or Tribunal or Court appointed or constituted under the Indian Inconm tax Act, 1922, to levy, assess and collect incometax and super tax payable under the Mysore law prior to the commencement of the Constitution of India.
The contention is based on two grounds: namely, firstly, on general constitutional principles the Union Parliament had no power to make a law, having retrospective operation with reference to the pre Constitution period; and secondly, the Union Parliament is prohibited by article 277 of the Constitution by necessary implication from making a law grafting on the Mysore income tax law the machinery for assessment and collection provided under the Indian Income tax Act, 1922, for purposes of assessment thereunder.
So far as the first ground is concerned, the case is governed by the judgment just delivered in the Rajasthan case [Union of India vs Madan Gopal Kabra (1) ].
It remains only to deal with the second ground based on article 277.
That article reads thus : "Any taxes, duties,.cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that (1) Infra p. 541.
71 540 those taxes, duties, cesses, or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.
" It was urged that, inasmuch as the article authorises, among others, the income tax and super tax, which was being lawfully levied by the Government of Mysore prior to the commencement of the Constitution to be levied and to be applied to the same purposes even after the commencement of the Constitution until provision to the contrary is made by Parliament by law, and no such law was made by Parliament till April 1, 1950, when the Indian Finance Act, 1950, was enacted, it followed by necessary implication, the Mysore law of income tax must be applied for the levy, assessment and collection of such taxes and, as the legislative power conferred on Parliament by article 245 is subject to the provisions of the Constitution including article 277, Parliament had no power to legislate, grafting officers and authorities.
appointed under the Indian Income tax Act, on the Mysore State, for the levy, assessment and collection of the tax under the State law.
We see no force in this argu ment.
While article 277 undoubtedly authorises the continued levy of taxes lawfully levied by the Government of the State before the commencement of the Constitution and their application to the same purposes as before, even after the Constitution came into force, there is nothing in the article to warrant any implication that such taxes should continue to be levied, assessed and collected by the same State authorities as before the Constitution.
As the High Court rightly pointed out, it would obviously have been inconvenient and unnecessary to have officers appointed under the Mysore Income tax Act continuing to function only in respect of the earlier assessment years side by side with officers appointed under the Indian Income tax Act also functioning in the State for assessments subsequent to April 1, 1950.
Both as a measure.
of economy and with a view to smooth and efficient management, it 541 was obviously necessary and desirable that the changeover from the Mysore income tax law to the Indian Income tax Act should be in the way provided by section 13 of the Indian Finance Act, 1950.
We find nothing in article 277 of the Constitution to preclude Parliament making a law providing for the levy and collection of income tax and super tax under the Mysore Act through authorities appointed under the Indian Income tax Act.
Accordingly, we hold that the Income tax Officer, Special Survey Circle, Bangalore, had jurisdiction to assess the appellant to income tax and super tax in respect of the income of the period prior to the commencement of the Constitution.
The appeals fail and are dismissed with costs.
Appeals dismissed.
| The assessee challenged the jurisdiction of the Income tax Officer, Special Survey Circle, Bangalore, to assess income tax and super tax on his income accruing prior to April 1, 1950, in the State of Mysore, on the ground that the proviso to section 13 of the Indian Finance Act, 1950, by virtue of which he was exercising his power was ultra vires and void as the Parliament had no pow or to make a law authorising any officer appointed under the Indian Income tax Act to levy tax under the Mysore law prior to the Constitution.
It was contended (i) that on general constitutional principles the Union Parliament had no power to make a law having retrospective effect with reference to pre Constitution period, (ii) that the Parliament was also prohibited by article 277 from making a law authorising such officers as in the present case to mot in the State of Mysore: Held, (repelling the contentions) (i) that the Parliament had such power vide the judgment delivered in Case No. 296 of 1951, (ii) that while article 277 authorises the continued levy of taxes lawfully levied by the Government of the State before the commencement of the Constitution and their application to the same purposes as before, even after the Constitution came into force, there is nothing in the article to warrant any implication that such taxes should continue to be levied, assessed and collected by the same State authorities as before the Constitution and there is nothing in article 277 to preclude Parliament making a law providing for the levy and collection of income tax and super tax under the Mysore Act 'through authorities appointed under the Indian Income tax Act.
|
ivil Appeal No. 107 of 1952.
Appeal from the Judgment and Order dated 22nd March, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) in Reference No. 4 of 1950 .in .Civil
Rule No. 1643 Of 1950.
M.C. Setalvad, Attorney General for India ' (B. Sen, with him) for the appellant.
Atul Chandra Gupta (Jay Gopd Ghose, with him) for respondent NO. 1. 1953.
December 17.
The following Judgments were delivered.
PATANJALI SASTRI C.J.
This appeal raises issues great public and private importance regarding the extent of protection.
which the .
Constitution of India accords to ownerships of private property.
The first respondent herein (hereinafter referred to as the respondent) purchased the entire Touzi No. 341 of the 24 Parganas Collectorate at a revenue sale held on ,January 9, 1942.
As such purchaser, the respondent acquired under section 37 of the Bengal Revenue Sales Act, 1859 (Central Act No. 11 of 1859) the right "to avoid and annul all under tenures and forthwith to eject all under tenants" with certain exceptions which are not material here.
In exercise of that right the respondent gave notices of ejectment and brought a suit in 1946 to evict certain under tenants, including the second respondent herein, and to recover possession 594 of.
the lands.
The suit was.
decreed against the second respondent who preferred an appeal to the District Judge, 24 Parganas, Contending that his undertenure came within one of the exceptions referred to in section 37.
When the appeal was pending, the Bill, which was later passed as the West Bengal Revenue Sales (West .
Bengal Amendment) Act, 1950, (hereinafter referred to as"the 'amending Act") was introduced in the West Bengal 'Legislative Assembly on March 23, 1950.
It would appear, according to the ."statement 0f objects and reasons" annexed to the Bill, that great hardship was being caused to a large section of the people by the. application of section 37 of the Bengal Land Revenue Sales Act, 1859, in the urban areas and particularly in Calcutta and its suburbs where "the present phenomenal increase in land values has supplied the necessary incentive to speculative purchasers in exploiting this provision .(section 37) of the law for unwarranted large scale eviction" and it was,therefore,.
considered necessary to enlarge the scope of protection already given by the section to certain categories of tenants with due safeguards for the security Of Government revenue.
The Bill was eventually passed as the amending Act and it .came into force on.
March 15, 1950.
It substituted by section 4 'the 'new section 37 in the place of the original section 37, and ' it provided by section 7 that all pending suits, appeals and other proceedings which had not already resulted in delivery of possession shall ' abate.
, Thereupon, the respondent, contending that section 7 was 'void as abriging his fundamental fights under article 19(1) (f) and article 31, moved the High Court 'under article 228 to withdraw the pending appeal and determine the constitutional issue . 'raised by him.
The appeal accordingly.
withdrawn 'and the case was heard by Trevor Harries C.J. and Banerjee J. who, by separate but, concurring 'judgments, declared section 7 unconstitutional and void '::and.
returned the :case: to the District Court 'for: disposal, in conformity 595 with 'their decision.
The learned Judges held that the respondent 's right to annul under tenures and evict under tenants being a vested right acquired by him under his purchase before section 37 was amended, the retrospective deprivation of that right by section 7 of the amending Act without any abatement of the price paid by the respondent at the revenue sale was an infringement of his fundamental right under article 19(1) (f) to hold property with all the rights .
acquired under his purchase, and as such deprivation was not a reasonable restriction on the respondent 's exercise of his vested right, section 7 was not saved by clause (5) of that article and was void.
On behalf of the appellant State the learned Attorney General contended before uS that if, as the respondent claims, his right to annul under tenures and.
evict under tenants in occupation other than those protected under the original enactment, was "property '" within the meaning of clause (1) Of article 19, then, it was also "property" within the meaning of clause (1) of article 31, as the expression must have the same 'connotation in both the provisions, and the respondent, ' having been "deprived" of it under the authority of law, namely, section 7 of the amending Act, such deprivation was lawful and could not be challenged.
In support of this contention learned counsel strongly relied on the observations of my learned brother Das in Chiranjit Lal Choudhury 's case(1 ) and ' also on the .analogy of the reasoning of the majority 'in ;Gopalan 's case(z).
Alternatively, it was urged that if the correct view was that the nullification of the respondent 's right was only the imposition of a "restriction" on the enjoyment of the property purchased by him, as .has been held by the learned Judges.
below, then, it was a reasonable restriction imposed in ,the ' interests of the general public under clause (5)of article 19, having regard to the facts and circumstances which led to the enactment of the measure as .
disclosed in the Statement of Objects and (1) ; " (2) [1954] Reasons annexed to the Bill which, for this purpose, is admissible.
It will be convenient to deal first with the latter contention of the Attorney General.
Sub clause (f) 0f clause (1) of article 19 has, in my opinion, no application to the case.
That article enumerates certain freedoms under the caption "right to freedom" and deals with those great and basic rights which are recognised and guaranteed as the natural rights inherent in the status of a citizen of a free country.
The freedoms declared in sub clauses (a) to (e) and (g) are clearly of that description and in such context sub clause (f) should, I think, also be understood as declaring the freedom appertaining to the citizen of free India in the matter of acquisition, possession and disposal of private property.
In other words, it declares the citizen 's right to own property and has no reference to the right to the property owned by him, which is dealt with in article 31.
Referring to the "privileges and immunities" mentioned in article 4 and Amendment 14 of the American Federal Constitution, Bradley J. said in Butchers Union etc.
Co. vs Crescent City etc.
Co.(1): "The phrase has a broader meaning.
It includes those fundamental privileges and immunities which belong essentially to the citizens of every free government, among which Washington J. enumerates the ' right of protection; the right to pursue and obtain happiness and safety; the right to pass through and reside in any State 'for the purposes of trade, agriculture, professional pursuits or otherwise; to claim the benefit of the wnt of habeas corpus; to institute and maintain actions of any kind in the courts of the State and to take, hold and dispose of property either real or personal.
(Corfield vs Coryell, These rights are different from the concrete fights which a man may have to a specific chattel or a piece of land or to the performance by another of a particular contract, or to damages of a particular wrong, all which may be invaded by individuals; they are the capacity, power or privilege of having and enjoying (1) 111 U. 8.
597 those concrete rights and of maintaining them in the courts, which capacity, power or privilege can only be invaded by the State.
These primordial and fundamental rights are the privileges and immunities citizens which are referred to in the 4th article of the Constitution and in the 14th Amendment to it." (Italics mine).
We are not here concerned with the meaning and content of the phrase"privileges and immunities" in the context of thoseprovisions which, according to some of the Judges,have a reference only to those privileges and immunities which owe their existence to the Federal Constitution or its laws.
What is of importance for the present purpose is that the two learned Judges thought that the "right to take, hold and dispose of property" was one of those "primordial and fundamental rights" of the same class 'as the right to pursue happiness and safety and other such basic freedoms appertaining to free citizens and was different from the concrete rights which a person may have to a specific res or thing owned, being the capacity, power or privilege of having and enjoying those concrete rights.
Sub clause (f) of clause (1) of article 19 seems analogous to clause (1) of article 17 of the United Nations Declaration of Human Rights "Everyone has the right to own property alone as well as in association with others" and article 31 to clause (2) of article 17 "No one shall be arbitrarily deprived of his property.
" I have no doubt that the framers of our Constitution drew the same distinction and classed the natural right or capacity of a citizen "to acquire, hold and dispose of property" with other natural rights and freedoms inherent in the status of a free citizen and embodied them in article 19(1), while they provided for the protection of concrete rights of property owned by a person in article 31.
The meaning of the phrase,"to acquire, hold and dispose of property" as well as the nature of the subject matter to which it has reference in the sense indicated above, is also clear from the terms of sections 111 and 298 of the Government of India Act, 1935, where the same phrase is used 598 in prohibiting imposition of "disability" on grounds of religion, place of birth, .descent, colour or any of them on a British subject domiciled 'in the United Kingdom and on an indian subject of His Majesty determined, in the case of citizens and non citizens not deal with expropriation of specific property belonging to such persons which is dealt with in section 299.
There are difficulties in the way of accepting the view of the learned Judges below that article 19 (1) (f) and 19 (5) deal with the concrete rights of property and the restraint to which they are liable to be subjected.
In the first place, it will be noticed that sub clause (f) of clause (1) of article 19 deals only with the rights of citizens, whereas article 31 deals with the rights of persons in general.
If article 31, which is headed by the caption "right to property", was designed to protect property rights of citizens as well as non citizens, why was it considered necessary to provide for the protection of those rights in sub clause (f) of clause (1) of article 19 also ? I do not think that our Constitution makers could have intended to provide a double barrelled constitutional protection to private property.
Moreover, right to "acquire" and "dispose of" property could only refer to the capacity of a citizen.
The word "hold", which is inserted between those two words must, in my opinion, be understood to mean "own", and not as having reference to something different, viz., rights to specific things owned by a citizen ? I see no force in the objection that unless sub clause (f) of clause (1) of article 19 read with clause (5) is construed as relating to concrete property rights also, the legislature would have the power to impose even unreasonable restrictions on the enjoyment of private property by citizens.
It is difficult to believe that the framers of our Constitution could have intended to differentiate between citizens and non citizens in regard to imposition of restrictions on enjoyment of private property.
Such restrictions are imposed in exercise of the power inherent in the State to regulate private rights of property when they 599 are sought to be exercised to 'the injury of others having similar rights, and the ,measure of restriction imposed.
in exercise of such regulative power must be determined, in the case of citizens and non citizens alike, by the necessity of protecting the community.
On the other hand, differential treatment of citizens and non citizens would be perfectly intelligible if subclause (f) of clause (1) of article 19 and clause (5) are understood as dealing only with the freedom or capacity to acquire, hold and dispose of property in general, for, it would be justifiable to exclude aliens from such freedom, as has been done in several countries for the benefit of their own nationals, particularly in respect of land.
Moreover, both by the preamble and the directive principles of State policy in Part IV, our "Constitution has set the goal of a social welfare State and this must involve the exercise of a large measure of social control and regulation of the enjoyment of private property.
If concrete rights of property are brought within the purview of article 19(1)(f), the judicial review under clause (5)as to the reasonableness of such control and regulation might have an unduly hampering effect on legislation m that behalf, and the makers of our Constitution may well have intended to leave the Legislatures free to exercise such control and regulation in relation to the enjoyment of rights of property, providing only that if such regulation reaches the point of deprivation of property the owner should be indemnified under clause (2) of article 31 subject to the exceptions specified in para.
(ii) of sub clause (b) of clause (5) of article 31. 'Nor am I much impressed with the suggestion that the reference to "exercise" in clause (5) of article 19 of the rights conferred by sub clause (f) of clause (1) indicates that ' the ' latter rights must be fights of property.
Clause (5) could as well contemplate restrictions on the excercise of a citizen 's freedom to acquire, hold and dispose of property, as for instance, banning acquisition of land in a givien locality, say a tribal area, or putting a ceiling on the quantum of land that a citizen can hold, or restricting alienation of land to specified classes of persons only (of.
Punjab Province vs 600 Daulat Singh and Other (1) and the reasonableness of such restrictions being brought under judicial review.
For all these reasons, I am of opinion that under the scheme of the Constitution, all those broad and basic freedoms inherent in the status of a citizen as a free man are embodied and protected from invasion by the State under clause (1)of article 19, the powers of State regulation of those freedoms in public interest being defined in relation to each of those freedoms by clauses (2) to (6) of that article, while rights of private property are separately dealt with and their protection provided for in article 31, the cases where social control and regulation could extend to the deprivation of such rights being indicated in para.
(ii)of subclause (b) of clause (5) of article 31 and exempted from liability to pay compensation under clause (2).
On this view, no question of correlating article 19 (1) (f) with article 31 could arise and the analogy of Gopalan 's case has no application.
On this view, the question whether section 7 0/3 the amending Act is a reasonable restriction on the exercise of the res pondent 's right to the property purchased by him could not also arise, as ' clause (5) of article 19 could then have reference only to disabilities of the kind already mentioned.
Turning next to the ' contention based on article 31 (1), it Was put thus in the language of Das J. in Chiranjit Lal Choudhury 's case( ) which the learned Attorney General fully adopted: "Article 31(1) formulates the fundamental right in negative form prohibiting the deprivation of property except by authority of law.
It implies that a person may be deprived of his property by authority of law.
Article 31(2) prohibits the acquisition or taking possession of property for a public purpose under any law, unless such law provides for payment of compensation.
It is suggested that clauses (1) and (2) 0f article 31 deal with the same topic, namely, compulsory acquisition or taking possession 0f property, clause (2) being only an elaboration of clause (1).
There appear (1) [1946] F.C .R. 1 CP. C.).
(2) ; , 924. , 601 to me to be two objections to this suggestion.
If that were the correct view, then clause (1) must be held to be wholly redundant and clause (2), by itself, would have been sufficient.
In the next place such a view would exclude deprivation of property otherwise than by acquisition or taking of possession.
One can conceive of circumstances where the State may have to deprive a person of his property without acquiring or taking possession of the same.
For example, in any emergency, in order to prevent a fire spreading, the authorities may have to demolish an intervening building.
This deprivation of property is supported in the United States of America as an exercise of "police power".
This deprivation of property is different from 'acquisition or taking of possession of property which goes by the name of "eminent domain" m the American law.
The construction suggested implies that our Constitution has dealt with only the law of "eminent domain", but has not provided for deprivation of property in exercise of "police powers".
I am not prepared to adopt such construction, for I do not feel pressed to do so by the language used in article 31.
On the contrary, the language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may welt be brought about otherwise than by acquiring or taking possession of it.
I think clause (1) enunciates the general principle that no person shall be deprived of his property except by authority of law, which, put in a positive form, implies that a person may be deprived of his property, provided he is so deprived by authority of law.
No question of compensation arises under clause (1).
The effect of clause (2) is that only certain kinds of deprivation of property, namely those brought about by acquisition or taking possession of it, will not be permissible under any law, unless such law provides for payment of compensation.
If the deprivation of property is brought about by means other than acquisition or taking possession of it, no compensation is required, provided that such deprivation is by authority of law.
" I have made this lengthy extract in order to avoid possible unfairness in summarising it.
These 2 9 S.C.I./59 602 observations were made while rejecting an argument of the petitioner in that case, which, however, the learned Judge decided in his favour on another point, and are thus purely obiter.
With all respect to my learned brother I am unable to share the view expressed by him.
He reads clauses (1) and (2)as mutually exclusive in scope and content, clause (2) imposing limitations only on two particular kinds of deprivation of private property, namely, those brought about by acquisition or taking possession thereof, and clause (1).
authorising all other kinds of deprivation with no limitation except that they should be authorised by law.
There are several objections to the acceptance of this view.
But the most serious of them all is that it largely nullifies the protection afforded by the Constitution to rights of private property and, indeed, stultifies the very conception of the "right to property" as a fundamental right.
For, on this view, the State, acting through its legislative organ, could, for instance, arbitrarily prohibit a person from using his property, or authorise its destruction, or render it useless for him, without any compensation and with out a public purpose to be served thereby, as these two conditions are stipulated only for acquisition and taking possession under clause (2).
Now, the whole object of Part Iii of the Constitution is to provide protection for the freedoms and rights mentioned therein against arbitrary invasion by the State, which as defined by article 12 includes the Legislatures of the country.
It would be a startling irony if the fundamental rights of property were, in effect, to be turned by ,construction into an arbitrary power of the State to deprive a person of his property without compensation in all ways other than acquisition or taking possession of such property.
If the Legislatures were to have such arbitrary power, why should compensation and public purpose be insisted upon in connection with what are termed two particular forms of deprivation ? What could be the rational principle underlying this differentiation ? To say that clause (1) defines the "police power" in relation to rights of property is no satisfactory answer, as the Same power 603 could as well have been extended to these two particular kinds of deprivation.
Such extension would at least have avoided the following anomaly:compensation is paid to indemnify the owner for the loss of his property.
It could make no difference to him whether such deprivation was authorised under clause (1)or clause (2).
In either case his property would be gone and he would suffer loss.
It would matter little to him what happened to the property after he was deprived of it whether it was used for a public purpose or was simply destroyed without any public purpose being served.
In fact, he could more readily reconcile himself to the loss forced upon him if he found his property being used for the public benefit; for, in that case, he would be participating in that benefit as a member of the public.
But that consolation would be denied to him by deprivation under clause (1), which makes his 0loss all the more grievous.
But, according to Das J.s.
reading of that clause, the Constitution makers have provided for no indemnification of the expropriated owner.
Why ? Because,it is said, deprivation under clause (1) is an exercise of "police power.
" This, to my mind, is fallacious.
You first construe the clause as conferring upon the State acting through its Legislature unfettered power to deprive owners of their property in all other cases except the two mentioned m clause (2), and then seek to justify such sweeping and arbitrary power by calling it "police power." According to Das J. clause (1) was designed to confer "police power" on the State to deprive persons of their property by means other than acquisition or taking possession of such property.
He would read the clause in a positive form as implying that a person may be deprived of his property by authority of law.
In other words, the framers of our Constitution, who began Part Ill by formulating the fundamental rights of individuals against invasion by the Legislatures in the country, ended by formulating the right of the Legislatures to deprive individuals of their property without compensation.
604 Speaking of police power, as applied to personal liberty, Prof. Willis says( 1 ): There are two main requirements for a proper exercise of the police power (1) there must be a social interest to be protected which is more important than the social interest in personal liberty, and (2) there must be, as a means for the accomplishment of this end, something which bears a substantial relation there to.
This statement is equally true of police power as applied to private property.
This is recognised and given effect to in clauses (2) to (6) of article 19 which delimit the regulative power of the Legislatures as applied to the freedoms enumerated in clause (1)of that article including the freedom referred to in sub clause (f).
But clause (1) of article 31 imposes no such limitations.
Why should such absolute power be conferred on the Legislature in relation to private property, whereas the exercise of restrictive power under clauses (2) to (6) of article 19 is carefully limited to specified purposes and to the imposition of only reasonable restrictions in each of those cases ? Could it have been intended that, while restriction imposed on the freedoms mentioned in clause (1) of article 19 should be reasonable and in public interest, deprivation of property, except in the two cases provided for in clause (2) of article 31, need not be reasonable nor for the public benefit ? To say that the requirement of "authorisation by law" was considered sufficient limitation in all other cases of deprivation takes no note of the fact that in the case of restrictions under clauses (2) to (6) of article 19 also, their authorisation could only be by law and yet other limitations have been imposed.
In fact, authorisation by law can obviously be no limitation on the Legislature, and "police power", as developed in the American case law, is essentially a legislative power.
Now, what is this "police power" and how does the Constitution of India provide for its exercise by the State ? Referring to the doctrine of police power (1) Constitutional Law, p. 728.
605 in America, I said in Gopalan 's case(1): "When that power (legislative power) was threatened with prostration by the excesses of due process, the equally vague and expansive doctrine of "police power", i.e., the power of Government to regulate private rights in public interest, was evolved to counteract such excesses" And Das J. (1), said that the content of due process of law had to be narrowed down by the "enunciation and application of the new doctrine of police power as an antidote or palliative to the former".
This court held in the aforesaid case that the framers of our Constitution definitely rejected the doctrine of due process of law.
Is it to be supposed that they accepted the "antidote"doctrine of police power and embodied it in clause(1) of article 31 as a specific power conferred on the Legislatures to deprive persons of their property ? The suggestion seems unwarranted and, indeed, contrary to the scheme of our Constitution.
That scheme, in marked contrast with the Constitution of America, is to distribute legislative powers among the Union and the State Legislatures according to the Lists of the Seventh Schedule and among such powers was included the power of "acquisition or requisitioning of property" for Union and State purposes in entry No. 33 of List I and No. 36 of List II respectively.
Thus, what is called the power of eminent domain, which is assumed to be inherent in the sovereignty of the State according to Continental and American jurists and is accordingly not expressly provided for in the American Constitution, is made the subject of an express grant in our Constitution.
Having granted the power in express terms, the Constitution defines in article 31 the limitations on the exercise thereof as constituting the fundamental right to property of the owner, all fundamental rights of the people being restraints on the State [see observations at page 198 in Gopalan 's case(1)].
But the power of social control and regulation of private rights and freedoms for the common good (1) ; , 200.
(2) ; , 313.
606 being an essential attribute of a social and political organisation otherwise called a State, and pervading, as it does, the entire legislative field, was not specially provided for under any of the entries in the legislative Lists and was left to be exercised, wherever desired, as part of the appropriate legislative power.
Even where such regulative powers are defined and delimited, as for instance in clauses (2) to (6) of article 19 in relation to the rights and freedoms specified in clause (1), the powers themselves are left to be exercised under laws made with respect to those ' matters.
For example, the power of social control and regulation as applied to freedom of speech and expression is exercisable under a law made with respect to entry No. 1 of List II (Public Order) or entry No. 39 of List III (Newspapers, books and printing presses) and in relation to a freedom not falling under clause (1) of article 19, like the freedom to drink or to eat what one likes, such freedom can be restrained or even prohibited under a law made with reference to entry No. 8 of List II (Intoxicating liquors, etc.) or entry No. 19 of List III (Drugs and poisons).
Thus the American doctrine of police power as a distinct and specific legislative power is not recognised in our Constitution and it is therefore contrary to the scheme of the Constitution to say that clause (1) of article 31 must be read in positive terms and understood as conferring police power on the Legislature in relation to rights of property.
I entirely agree with the observations of Mukherjea J. in Chiranjit Lal 's case(1 ), that "In interpreting the provisions of our Constitution we should go by the plain words used by the Constitution makers and the importing of expressions like 'police ' power ', which is a term of variable and indefinite connotation in American law, can only make the task of interpretation more difficult.
" The correct approach, in my opinion, to the interpretation of article 31 is to bear in mind the context and setting in which it has 'been placed.
As already stated, Part III of the Constitution is designed to afford protection to the freedoms and rights mentioned (1) ; , 907 607 therein against inroads by the State which includes the Legislatures as well as the executive Governments in the country.
Though, as pointed out in Gopalan 's case (1) citing Eshukbayi Eleko vs Officer Administering the Government of Nigeria( 2 ), protection against executive action is not really needed under systems of Government based on British jurisprudence according to which no member of the executive can interfere with the liberty or property of a subject except in pursuance of powers given by law, our Constitution makers, who were framing a written Constitution, conferred such protection explicitly by including the executive Governments of the Union and the States in the definition of "the State" in article 12.
A fundamental right is thus sought to be protected not only against the legislative organ of the State but also against its executive organ.
The purpose of article 31, it is hardly necessary to emphasis, is not to declare the right of the State to deprive a person of his property but, as the heading of the article shows, to protect the "right to property"of every person.
But how does the article protect the right to property ? It protects it by defining the limitations on the power of the State to take away private property without the consent of the owner.
It is an important limitation on that power that legislative action is a pre requisite for its exercise.
As pointed out by Cooley, "The right to appropriate private property to public uses lies dormant in the State, until legislative action is had, pointing out the occasions, the modes, conditions, and agencies for its appropriation.
Private property can only be taken pursuant to law"(3).
In England the struggle between prerogative and Parliament having ended in favour of the latter, the prerogative right of taking private property became merged in the absolutism of Parliament, and the right to compensation as a fundamental right of the subject does not exist independently of Parliamentary enactment.
The result is that Parliament alone could authorise interference with the enjoyment of private property.
(1) ; (2) ; (3) Constitutional Limitations, Vol.
II, p. 1119.
608 Blackstone also says that it is the Legislature alone that can interpose and compel the individual to part with his property(1).
It is this limitation which the framers of our Constitution have embodied in clause (1) of article 31 which is thus designed to protect the rights to property against deprivation by the State acting through its executive organ, the Government.
Clause (2) imposes two further limitations on the Legislature itself.
It is prohibited from making a law authorising expropriation except for public purposes and on payment of compensation for the injury sustained by the owner.
These important limitations on the power of the State, acting through the executive and legislative organs, to take away private property are designed to protect the owner against arbitrary deprivation of his property.
Clauses (1) and (2) of article 31 are thus not mutually exclusive in scope and content, but should, in my view, be read together and understood as dealing with the same subject, namely, the protection of the right to property by means of the limitations on the State power referred to above, the deprivation contemplated in clause (1) being no other than the acquisition or taking possession of property referred to in clause (2).
Much argument was expended to show that clause (2) dealt only with two specified modes of depriving a person of his property, namely, acquisition and requisitioning and could not, therefore, be considered to be a mere elaboration of clause (1), which referred to deprivation generally.
It was submitted that clause (2) should be read with entry No. 33 of List I, No. 36 of List II and No. 42 of List III, each of which refers to acquisition or requisitioning of property and to no other mode of deprivation.
It was also pointed out that sub section (2) of section 299 of the Government of India Act, 1935, as well as entry No. 9 of List II of the Seventh Schedule thereof referred only to compulsory acquisition of land for public purposes, and it was not until the Bombay High Court held in Tan Bug Taim and Others vs The Collector of Bombay anal Others (2), that rule 75(a) of the Defence of India Rules (1) Commentaries, Vol.
I, p, 110.
(2) I.L.R. 609 under which a property situated in Bombay was requisitioned was ultra vires on the ground that entry No. 9 of List II did not confer on the Legislature the power of requisitioning, that such power was conferred on the Central Legislature by the India (Proclamations of Emergency) Act, 1946 (9 and 10 Geo.
V, Ch. 23).
Attention was drawn to the Regulations and Acts relating to compulsory acquisition of land in this country including the Land Acquisition Act, 1894, all of which provided for the vesting of the property acquired in the Government or in one of its officers, and it was suggested that the framers of our Constitution, who must have been aware of the difficulties arising out of the lacuna in the Government of India Act, 1935, in regard to the power of requisitioning, added the words "taken possession of" in clause (2) and the word "requisitioning" in the entries referred to above.
It was, therefore, urged that the words "acquired" or "taken possession of" should not be taken to have reference to all forms of deprivation of private property by the State.
I see no sufficient reason to construe the words "acquired or taken possession" used in clause (2) of article 31 in a narrow technical sense.
The Constitution marks a definite break with the old order and introduces new concepts in regard to many matters, particularly those relating to fundamental rights, and it cannot be assumed that the ordinary word "acquisition" was used in the Constitution in the same narrow sense in which it may have been used in pre Constitution legislation relating to acquisition of land.
These enactments, it should be noted, related to land, whereas article 31(2) refers to movable property as well, as to which no formal transfer or vesting of title is necessary.
Nor is there any warrant for the assumption that "taking possession of property" was intended to :mean the same thing as "requisitioning property" referred to in the entries of the Seventh Schedule.
If that was the intention, why was the word "requisitioning" not used in clause (2) as well ? It is fallacious to suggest that unless "taking possession" is synonymous with "requisitioning", the power to make a law 610 authorising the taking of possession of property would be lacking because no entry in any of the Lists of the Seventh Schedule confers that power.
A specific entry in the legislative Lists is no more necessary for conferring such power than for conferring power to make a jaw authorising deprivation of property which clause (1) of article 31 postulates.
[See observations in P.D. Shamdasani vs Central Bank of India(1)].
The word "acquisition" is not a term of art, and it ordinarily means coming into possession of, obtaining, gaining or getting as one 's own.
It is in this general sense that the word has been used in articles 9, 11 and 19(1) (f)and not as implying any transfer or vesting of title.
In Minister of State Jar the Army vs Dalziel(2 ) a Full Bench of the High Court of Australia had to construe the scope of the legislative power with respect to "acquisition" of property conferred on the Commonwealth Parliament by section 51 (xxxi) of the Austrailan Constitution (63 and 64 Vic., Ch. 12),.
and the court decided by a majority that the power included the power to take possession of property for a temporary purpose for an indefinite period.
To say that acquisition implies the transfer and vesting of title in the Government is to overlook the real nature of the power of the State as a sovereign acting through its legislative and executive organs to appropriate the property of a subject without his consent.
When the State chooses to exercise such power, it creates title in itself rather than acquire it from the owner, the nature and extent of the title thus created depending on the purpose and duration of the use to which the property appropriated is intended to be put as disclosed in the law authorising its acquisition.
No formula of vesting is necessary.
As already stated, in the case of moveable property no formal transfer or vesting of title apart from seizing it could have been contemplated And, what is more, clause (5) (b) (ii) of article 31, which excepts any law made in future "for the prevention of danger to life or property" from the operation, of clause (2) shows that the latter clause, but for such exception, would entail liability to pay compensation for deprivation by destruction, which must therefore (1) ; ,394.
(2) ; 611 be taken to fall within the scope of clause (2), for a law made for the prevention of danger to life or property may often have to provide for destruction of the property appropriate.
I am of opinion that the word "acquisition" and its grammatical variations should, in the context of article 31 and the entries in the Lists referred to above, be understood in their ordinary sense, and the additional words "taking possession of" or "requisitioning" are used in article 31(2) and in the entries respectively, not in contradistinction with, but in amplification of the term "acquisition", so as to make it clear that the words taken together cover even those kinds of deprivation which do not involve the continued existence of the property after it is acquired.
They would, for instance, include destruction which implies the reducing into possession of the thing sought to be destroyed as a necessary step to that end.
The expression "taking possession" can only mean taking such possession as the property is susceptible of and not actual physical possession, as "the interest in, or in any company owing, any commercial or industrial undertaking", which is expressly included in clause (2) of article 31, is not ' susceptible of any actual physical occupancy or seizure.
It is, however, unnecessary here to express any concluded opinion on the precise scope and meaning of the expression "shall be taken possession of or acquired" in clause (2) except to say that it does not admit of being construed in the same wide sense as the word "taken" used in the Fifth Amendment of the American Constitution, but implies such an appropriation of the property or abridgement of the incidents of its ownerships as would amount to a deprivation of the owner.
Any other interference with enjoyment of private property short of such appropriation or abridgement would not be compensable under article 31(2).
It will now be seen that the two objections raised by Das J. to the view expressed above, namely, that 612 clauses (1) and (2) must be read together and understood as dealing with the same topic, are really baseless.
The first objection is that clause (1) would then be redundant.
It would not be so because it embodies one of the three important limitations on the exercise of the State power of deprivation of private property, namely, the necessity for the legislative action as a condition precedent to the exercise of the power and constitutes a protection against the executive organ of the State.
The second objection that the State 's power in an emergency to deprive a person of his property without payment of compensation, as for example, to demolish an intervening building to prevent a conflagration from spreading, would be excluded is equally baseless.
Cases of that kind, as we have seen, would fail within the exception in clause (5)(b)(ii), and no compensation would be payable for the loss caused by the destruction of property authorised under that clause.
The learned Attorney General suggested that sub clause (b) was inserted ex abundante cautela as even without it no one could have supposed that a law of the kind mentioned in that sub clause would fall under clause (2).
There could have been no doubt, for instance, that the power of taxation referred to in paragraph (i) of that sub clause was a distinct power.
It is difficult to appreciate this argument.
If the exceptions in sub clause (b) were so obvious that they need not have been explicitly provided for, then equally must be second objection of Das J. fall to the ground.
To say that sub clause (b)is introduced by way of abundant caution is not to do away with the exceptions but to emphasise their existence aliunde.
Whether it was considered necessary to provide expressly that destruction of private property under emergency conditions entails no liability to pay compensation or whether the State 's power to do so was so well established that sub clause (b)(ii)was really unnecessary and must be taken to have been inserted ex abundante cautela, in either view, the second objection must equally fail.
The fact is that all the cases referred to in sub clause (b) are different forms 613 of deprivation of property and, as difficulties of construction might arise in a written Constitution if they are not expressly and specifically excepted from the requirement under clause (2) as to payment of compensation, the framers have thought it necessary to insert clause (5) (b).
Where was the necessity, it was asked, to provide in clause (1) of article 31 for protection against the executive government in the matter of compulsory acquisition of property by the State, as no such protection is provided for in the case of the regulative powers exercisable under article 19(2) to (6)? The answer is: the same need apparently which dictated the enactment of article 265 providing for similar protection in the matter of taxation.
In any case, this would be no more of an objection, if it be an objection, to the view I have indicated above than to the other view which also recognises the necessity for legislative action before a person could be deprived of his property.
Attention was called ' to article 38 as showing that one of the goals set by the Constitution was the promotion of social welfare, and it was urged that the attainment of that object as well as the growing complexities of modern conditions of life must call for an expanding power of social control and regulation, particularly in the sphere of the enjoyment of private property and that the exercise of such power without entailing liability to pay compensation ought not to be confined within the narrow limits specified in article 31 (5) (b).
This is a misconception.
In the first place, social welfare is not inconsistent with the ownership of private property and does not demand arbitrary expropriation of such property by the State without compensation.
On the other hand, as pointed out by Blackstone "The public good is in nothing more essentially interested than in the protection of every individual 's private rights as modelled by the municipal law"(1).
This is not an antiquated view.
So modern a document as the Declaration of Human (1) Commentaries Vol.
I, p. 109.
614 Rights in the United Nations has specifically provided for the protection of private property by including the clause "No one shall be arbitrarily deprived of his" in article 17 and the framers of our Constitution have evidently proceeded on that view.
Secondly, the argument also overlooks that clause (5) (b) was not intended to define and does not define exhaustively the power of social control and regulation in relation to rights of private property.
It only limits the purposes for which the power could be exercised without liability to pay compensation, though its exercise results in deprivation of property in the sense already explained.
But where its exercise does not involve deprivation of property, no question of paying compensation would arise, and the Legislatures in the country would, as already indicated, be free to enact laws providing for the exercise of such power within the fields marked out for them in the Legislative Lists.
There is, therefore, no room for the apprehension that article 31 (5)(b) would unduly cramp social control and regulation of private property for the public good or would lead to any alarming consequences to the safety of the community.
But why all this ado, it was asked, about protection against deprivation of property by legislative action ? There is no such protection provided in the Constitution against deprivation of property by the Legislature exercising the power of taxation.
Why then complain if there is no protection against the Legislature authorising deprivation of property without compensation under article 31(1) ? Our Constitution makers, it was said, trusted the Legislature, as the people of Great Britain trust their Parliament which protects the Englishman 's right to property.
In ultimate analysis, is not well informed and organised public opinion the true and effective protection against arbitrary action of the Legislature ? The argument has no force.
So far as the power of taxation is concerned, the Constitution recognises no fundamental right to immunity from taxation and that is why presumably no constitutional protection is provided against the exercise of that power.
But fundamental 615 rights under the Constitution stand on a different footing.
Indeed, the argument is a bold challenge to the policy of including a declaration of such rights in Part HI of the Constitution.
In Gopalan 's case(1), I said: "Madison (who played a prominent part in framing the First Amendment of the American Constitution) pointing out the distinction, due to historical reasons, between the American and the British ways of securing 'the great and essential rights of the people ', observed Here they are secured not by laws paramount to prerogative but by Constitutions paramount to laws. '" This has been translated into positive law in Part 1I1 ' of the Indian Constitution.
There have always been two schools of opinion regarding the efficacy of a declaration of fundamental rights in a Constitution.
Britain never believed in a formal declaration of such rights.
Referring to the ,demand of the Indian Delegation that the Parliamentary Bill which was later passed as the Government India Act, 1935, should embody certain fundamental rights, the Joint Parliamentary Committee observed(2 ): "The question of so called fundamental rights, which was much discussed at the three Round Table Conferences, was brought to our notice by the British India Delegation, many members of which were anxious that the new Constitution should contain a declaration of rights of different kinds, for reassuring minorities for asserting the equality of all persons before the law, and for other like purposes; and we have examined more than one list of such rights which have been compiled.
The Statutory Commission observe with reference to this subject: 'We are aware that such provisions have been inserted in many Constitutions, notably in those of the European States formed after the war Experience, however, has not shown them to be of any great practical value.
Abstract declarations are useless unless there exist the will and means to make them effective. 'With these (1)[1950] S.cR. 88, 198.
(2) Para.
616 observations we entirely agree; and a cynic might indeed find plausible arguments, in the history during the last ten years of more than one country, for asserting that the most effective method of ensuring the destruction of a fundamental right is to include a declaration of its existence in a constitutional instrument.
" But the American view is different.
Answering a similar objection to the inclusion of a Bill of Rights in the American Constitution, Jefferson said: "But though it is not absolutely efficacious under all circumstance 's, it is of great 'potency always, and rarely inefficacious.
A brace the more will often keep up the building which would have fallen with that brace the less.
There is a remarkable difference between the characters of the inconveniences which attend a declaration of rights, and those which attend the want of it.
The inconveniences of the declaration are, that it may cram Government in its useful exertions.
But the evil of this is short lived, moderate and reparable.
The inconveniences of the want of a declaration are permanent, affective, and irreparable.
They are in constant progressive from bad to worse.
The executive in our Governments is not the sole, it is scarcely the principal, object of my jealousy.
The ' tyranny of the Legislatures is the most formidable dread at present, and will be for many years." (Quoted in Cooley 's Constitutional Limitations, 8th Edn.
I, p. 535).
It is obvious that the .framers of our Constitution shared the American view and included Part III in the Constitution of India.
It is, therefore, a wrong ' approach to construe the articles of Part III by pointing to the British way, which is more a traditional than a constitutional way, of protecting the rights and liberties of the individual by making Parliament supreme.
On this view of the meaning and effect ' of article 31, the question is whether section 7 read with section 4 of the amending Act infringes the fundamental right of the respondent under that article.
These provisions 617 by their retrospective operation undoubtedly abridge the respondent 's rights of property by nullifying one of the incidents of the estate purchased by him at the revenue sale, namely, the right to annul certain kinds of under tenures and evict certain classes of undertenants in occupation of portions of the estate.
Does such abridgement amount to deprivation of property within the meaning of article 31 as interpreted above, and, if so, does it fall within the exception in clause (5) (b) (ii) of that article ? Now, the word "property" in the context of article 31 which is designed to protect private property in all its forms, must be understood both in a corporeal sense as having reference to all those specific things that are susceptible of private appropriation and enjoyment as well as in its juridical or legal sense of a bundle of rights which the owner can exercise under the municipal law with respect to the user 'and enjoyment of those things to the exclusion of all others.
This wide connotation of the term makes it sometimes difficult to determine whether an impugned law is a deprivation of property within the meaning of article 31 (2), for, any restriction imposed on the use and enjoyment of property can be regarded as a deprivation of one or more of the rights theretofore exercised by the owner.
The American courts have experienced similar difficulty in deciding whether a given statutory abridgement of the rights of the owner is an exercise of the police power" for which no compensation can be claimed, or a "taking" of property within the meaning of the Fifth Amendment clause "Nor shall private property be taken for public use without just compensation." "The general rule at least" said Holmes J. in delivering the majority opinion in Pennsylvania Coal Co. vs Mahon(1 ), "is that while property may be regulated to a certain extent, if regulation goes too far, it will be recognised as a taking.
" The vague and expansive doctrine of "police power" and the use of the term "taken" in the Fifth Amendment construed m a very wide sense so as to cover any injury or damage to property, coupled with the equally vague (1) ; 3 95 S.G.I./59 618 and expansive concept of "due process", allow a greater freedom of action to the American courts in accommodating and adjusting, on what may seem to them a just basis, the conflicting demands of police power and the constitutional prohibition of the Fifth Amendment.
Under the Constitution of India, however, such questions must be determined with reference to the expression "taken possession of or acquired" as interpreted above, namely, that it must be read along with the word "deprived" in ' clause (1)and understood as having reference to such substantial abridgement of the rights of ownership as would amount to deprivation of the owner of his property.
No cut and dried test can be formulated as to whether in a given case the owner is "deprived" of his property within the meaning of article 31; each case must be decided as it arises on its own facts.
Broadly speaking it may be said that an abridgement would be so substantial as to amount to a deprivation within the meaning of article 31 if, in effect, it withheld the property from the possession and enjoyment of the owner, or seriously impaired its use and enjoyment by him, or materially reduced its value.
The learned Judges of the High Court did not consider the case from this point of view.
As has been stated, they applied article 19 (1) (f) and (5) and held that section 7 of the amending Act, by its retrospective operation, imposed on the respondent 's enjoyment of the property purchased by him at the revenue sale restrictions which were not reasonable.
That view, for reasons already indicated, cannot be accepted and the matter has to be looked at from the point of view of article 31 as interpreted above.
A comparison of the scope and effect of the old section 37 which is substituted in its place by section 4 of the amending Act and which section 7 shows to be clearly retrospective, discloses that, although the right of a purchaser to annual under tenures and evict under tenants is curtailed by the new section 37 by enlarging the scope of the exceptions in the old section, it entitles the purchaser, as a countervailing advantage, to enhance the rent payable by the tenure holders and tenants 619 newly brought within the exception.
The purchaser is left free in other respects to continue in enjoyment of the property as before.
In other words, what the amending Act seeks to do is to enlarge the scope of the protection provided by the exception in the old section, as it was found to be inadequate, while conferring certain compensating benefits on the purchaser.
This amendment is in the line with the traditional tenancy legislation in this country affording relief to tenants whenever the tenancy laws were found, due to changing conditions, to operate harshly on the tenantry.
I find it difficult to hold that the abridgement sought to.
be effected retrospectively of the rights of a purchaser at a revenue sale is so substantial as to amount to a deprivation of his property within the meaning of article 31 (1) and (2).
No ' question accordingly arises to the applicability of clause (5) (b) (ii) to the case.
In the result, the appeal is allowed and the judgment of the High Court is set aside.
The first respondent will pay the costs of this appeal incurred by the appellant here and in the lower Court.
MEHR CHAND MAHAJAN J.
For reasons given in my judgment in Dwarkadas Shrinivas vs Sholapur Spinning and Weaving Mills Ltd., (C.A. 141 of 1952)(1 ) I agree with my Lord the Chief Justice in his construction of article 31 of the Constitution.
I also concur in the conclusions reached by him, and in his decision of the appeal.
DAS J. I agree that this appeal must be allowed but I have arrived at this conclusion by a different process of reasoning.
As the arguments advanced before us have raised very important constitutional issues it is only right that I should give the reasons for my decision in some detail.
The facts and circumstances leading up to the present appeal are as follows: At a revenue sale held on the 9th January, 1942, the respondent Subodh Gopal Bose purchased the entire Touzi No. 341 recorded in the collectorate of the (1) Reported infra.
620 permanently settled district of 24 Parganahs in West Bengal.
At the date of that sale the auction purchasers at a revenue sale had, under section 37 of the Bengal Land Revenue Sales Act, 1859, 'as it then stood, certain rights as therein mentioned.
That section ran thus: "37.
The purchaser of an entire estate ,in the permanently settled districts of Bengal, Bihar and Orissa, sold under this Act for the recovery of arrears due on account of the same shall acquire the estate free from all encumbrances which may have been imposed upon it after the time of settlement; and shall be entitled to avoid and annul all under tenures and forthwith to eject all under tenants, with the following exceptions : First Istimrari or Mukarrari tenures which have been held at a fixed rent from the time of the permanent settlement.
Secondly Tenures existing at the time of settlement which have not been held at a fixed rent , ' Provided always that the rents of such tenure shall be liable to enhancement under any law for the time being in force for the enhancement of the rent of such tenures.
Thirdly Talukdari and other similar tenure$ created since the time of settlement and held immediately of the proprietors of estates and farms for terms of years so held, when such tenures and farms have been duly registered under the provisions of this Act.
Fourthly Leases of lands whereon dwelling houses, manufactories or other permanent buildings have been erected, or whereon gardens, plantations, tanks, wells, canals, places of worship or burning or burying grounds have been made, or wherein mines have been sunk.
And such a purchaser as ' is aforesaid shall be entitled to proceed in the manner prescribed by any law for the time being in force for the enhancement of the rent of any land coming within the fourth class of exceptions above made, if he can prove the same to 621 have been held at what was orginally an unfair rent, and if the same shall not have been held at a fixed rent, equal to the rent of good arable land, for a term exceeding twelve years; but not otherwise; Provided always that nothing in this section contained shall be construed to entitle any such purchaser as aforesaid to eject any raiyat having a right of occupancy at a fixed rent or at a rent assessable according to fixed rules under the laws in force, or to enhance the rent of any such raiyat otherwise than in the manner prescribed by such laws, or otherwise than the former proprietor, irrespectively of all engagements made since the time of settlement, may have been entitled to do.
" In exercise of his rights under the section set out above, the respondent Subodh Gopal Bose annulled all ' under tenures and tenancies appertaining to the said Touzi and on tile 18th March, 1946, instituted a suit, being Title Suit No. 35 of 1946, in the Fourth Court of the Subordinate Judge at Alipore 24 Parganahs for the ejectment of respondents Nos. 2 to 6, claiming that he was entitled to recover possession of the lands in suit by virtue of the rights conferred on him by section 37.
The respondent No. 2, who was the defendant No. 1, alone contested the suit.
His defence was, inter alia, that he was a raiyat and as such protected by the proviso to section 37.
He ' also claimed protection under the fourth exception to that section.
The learned Subordinate Judge who tried the suit delivered his judgment on the 14th February, 1949.
By that judgment he overruled the contentions of the contesting defendant and passed a decree for ejectment against him.
He dismissed the suit against the other defendants (who are now respondents Nos. 3 to 6), holding that they were not necessary parties to the suit.
On the 25th March, 1949, the respondent No. 2 preferred an appeal, being Title Appeal No. 252 of 1949, before the District Judge at Alipore, 24Parganahs.
That appeal was transferred to the court of the Additional District Judge for hearing.
While 622 that appeal was pending the West Bengal Legislature passed West Bengal Act VII of 1950, called the Bengal Land Revenue Sales (West Bengal Amendment) Act of 1950, which received the assent of the Governor of Bengal on the 15th March, 1950, and was published in the Official Gazette on the day.
By section 4 of the amending Act, section 37 of the Bengal Revenue Sales Act, 1859, was replaced by a new section the material part of which runs thus: "37.
(1) The purchaser of an entire estate in the permanently settled districts of West Bengal sold under this Act for the recovery of arrears due on account of the same, shall acquire the estate free.
from all encumbrances which may have been imposed after the time of settlement and shall be entitled to avoid and annul all tenures, holdings and .leases with the following exceptions: (a) tenures and holdings which have been held from the time of the permanent settlement either free of rent or at a fixed rent or fixed rate of rent,.
and (b) (i) tenures and holdings not included in exception (a) above made, and (ii) other leases of land whether or not for purposes connected with agriculture or horticulture, existing at the date of issue of the notification for sale of the estate under this Act: Provided that notwithstanding anything contained in any law for the time being in force or in any lease or contract no person shall be entitled to hold under such a purchaser as is aforesaid any tenure holding or lease coming within exception (b) above made, free Of rent or at a low rent or at a rent or rate of rent fixed in perpetuity or for any specified period unless the right so to hold has been expressly recognised under any law for the time being in force by any competent civil or revenue court; and the purchaser shall be entitled to proceed in the manner prescribed; by any law for the time being in force for the 623 determination of a fair and equitable rent of such tenure, holding or lease.
" Section 7 of the amending Act provides as follows : : " 7.
(1) (a) Every suit or proceeding for the ejectment of any person from any land in pursuance of section 37 or section 52 of the said Act, and (b) every appeal or application for review or revision arising out of such suit or proceeding, pending at the date of the commencement of this Act shall if the suit, proceeding, appeal or application could not have been validly instituted, preferred or made had this Act been in operation at the date of the institution, the preferring or the making thereof, abate.
(2) Every decree passed or order made, before the date of commencement of this Act, for the ejectment of any person from any land in pursuance of section 37 or section 52 of the said Act shall, if the decree or order could not have been validly passed or made had this Act been in operation at the date of the passing or making thereof, be void , ' Provided that nothing in this section shall affect any decree or order in execution whereof the possession of the land in respect of which the decree or order was passed or made, has already been delivered before the date of commencement of this Act.
(3) Whenever any suit, proceeding, appeal or application abates under sub section (1) or any decree or order becomes void under sub section (2), all fees paid under the Court fees Act, 1870, shall be refunded to the parties by whom the same were respectively paid.
" It is quite clear that under this section 7 the suit of the respondent Subodh Gopal Bose must abate and the decree passed in his favour must become void if that section be valid law and intra vires the Constitution of India.
On the 21st July, 1950, the respondent Subodh Gopal Bose applied before the Additional District Judge before whom the ' appeal was pending to make 624 a reference under article 228 of the Constitution of India for a decision of the question whether the provisions of section 7 were void being ultra vires the Constitution.
The learned Additional District Judge by his order dated the 16th September, 1950, dismissed that application.
On the 24th November, 1950,the respondent Subodh Gopal Bose applied to the High Court under article 228 and eventually on the 18th December, 1950, the High Court directedthe appeal to be transferred to the High Court only for the decision of the constitutional point.
The proceedings were numbered as Reference Case No. 4 of 1950.
Notice having been given by the Court to the Advocate General of Bengal, the State of West Bengal appeared on the Reference.
On the 22nd March, 1951, the High Court held that section 7 imposed an unreasonable restriction on the respondent Subodh Gopal Bose 's right to hold property and violated his fundamental right guaranteed by article 19 (1) (f) read with article 19 (5) and was, therefore void under article 13 (1).
With this finding the High Court sent back the records to the lower appellate court for disposal of the appeal in the light of that finding.
On the 30th November, 1951, the High Court gave leave to the State of West Bengal to appeal to us.
Hence the present appeal.
Section 7 of the amending Act, the validity whereof is challenged before us, in terms, affects preexisting rights.
Accordnig to that section every suit or proceedings for ejectment under old section 37 and every appeal or application for review or revision arising out of such suit or proceeding pending at the commencement of the amending Act is to abate if the suit, proceeding, appeal or application could not have been validly instituted, referred or made, had the amending Act been in operation at the date of such suit, proceeding, appeal or application.
Further, every decree passed or order made before the commencement of the amending Act for the ejectment of any person from land in pursuance of old section 37 is likewise to become void if such decree or order could not 'have been validly passed or made if the 625 amending Act had been in operation at the date of the decree or order.
The proviso, however, saves decrees or orders in execution whereof possession had been delivered before the commencement of the amending Act.
It is, therefore,clear that section 7 affects pre existing rights bygiving, in effect,retrospective operation to section4 which has sub stituted, inter alia, the new section 37 for the old section 37 of the Act of 1859.
A cursory comparison of the language of the old section 37 with that of the new section 37 will at once make it clear that the substantial right given by the old sectionto the purchaser to avoid and annul under tenuresand to eject under tenants is no longer availableto him under the new section 37.
Although the opening part of the new section 37 purports to give to the purchaser the right to avoid and annul the tenures etc.
, that right, by reason of the wide sweep of exception (b), has, for all practical purposes, ceased to exist.
The new section 37 does not deprive the purchaser of the physical property, namely, the estate purchased at the revenue sale and he continuesto be the owner of that property and can exerciseand enforce all the rightes which his ownership giveshim, except that he cannot, by reason of the new section 37, avoid or annul the under tenures etc.
or eject the under tenants.
In other words, out of the bundle of rights constituting the ownership acquired by him under the old section 37, an item of important right has been taken away, thereby abridging or restrictin.g his ownership.
The respondent, Subodh Gopal Bose, contends that his fundamental right, under article 19(1)(f) of the Constitution, namely his right to hold, that is to say, his right to enjoy and exercise the full rights of ownership in relation to the property acquired by him under the old section 37 has been I violated and, therefore, section 7 which operates retrospectively and gives retrospective operation to the new section 37 is ultra vires the Constitution and is void under article 13(1).
The learned Attorney General has not seriously contended that the impugned section has not 626 prejudicially affected the right given to the purchaser by the old section 37 but he maintains that the abridgement of the rights of the purchaser at a revenue sale brought 'about by the new section 37.
amounts to nothing more than the imposition of a reasonable restriction on the exercise of the right conferred by article 19 (1) (f) in the interests of the general public and is perfectly legitimate and permissible under clause (5) of that article.
The High Court repealled the above noted contention and held that the restriction was unreasonable.
The High Court based its conclusions on three things, namely, (1) the retrospective operation of the impugned section, (ii) the absence of any provision for the abatement of the purchase price and (iii) the failure of the State to show any reason why the impugned section was introduced into the amending Act.
The learned Attorney General submits that the first two elements taken into consideration by the High Court are wholly irrelevant for the purpose of determining whether the restriction imposed was reasonable in the interest of the general public.
Ordinarily a statute is construed prospectively unless it is made retrospective by express words or necessary intendment; but, the learned Attorney General submits, the fact that a statute is expressly or by necessary implication made retrospective, does not, by itself, furnish any cogent reason for saying that the statute is prima.
facie unfair and, therefore, unreasonable.
While I see some force in this argument I am, nevertheless, not convinced that the fact of the statute being given retrospective operation may not be properly taken into consideration in determining the reasonableness of the restriction imposed in the interest of the general public.
Nor am I satisfied that the loss occasioned to the purchaser by reducing, without any abatement of the 'purchase price, an estate in possession into one in reversion may not also be taken into account in determining the reasonableness of the restrictions permissible under article 19 (5).
As said by my Lord the Chief justice in The State of Madras vs V.G. Row(1) (I) ; at 7.607.
627 "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid ' down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be.
remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
" As regards ,the third element, the High Court has pointed out that no suggestion had been made before it that the number of pending suits or proceeding for ejectment of tenants was abnormally large or that there was any other cogent reason for introducing the impugned section in the amending Act.
Indeed, in the later case of Iswari Prasad vs N.R. Sen(1) a special bench of the same High Court, consisting of three learned Judges including the two who had decided the case under appeal before us, has distinguished the very judgment from the one then under appeal, and in doing so, laid great emphasis on the absence of any such suggestion in this case.
The High Court held that those circumstances were present in the later case and accordingly held that the law impugned in the later case was not unconstitutional.
It is, indeed, very unfortunate that several important matters which would have assisted the High Court in arriving at a right conclusion as to the reasonableness of the restrictions imposed by the impugned section were not brought to the notice of the High Court.
Thus, for example, the statement of objects and reasons appended to the Bill which eventually became the amending Act does not appear to have been placed before the High Court.
The statement of the objects and, reasons appended to the Bill quite clearly refers to the great hardship caused by the application of the old section 37 to a large number of people in the urban area and particularly in Calcutta (1) at p. 727. 628 and its suburbs where the then prevailing phenomenal increase in land values had supplied the necessary incentive to speculative purchasers in exploiting that section for unwarranted large scale eviction and maintains, according to the sponsor of the Bill, that such large scale evictions necessitated the enlargement of the scope of protection of that section, with due safeguards for the securing of Government revenue.
It is well settled by this court that the statement of objects and reasons is not admissible as an aid to the construction of a statute (see Aswini Kumar Ghose vs Arabinda Bose(1)) and 1 am not, therefore, referring to it for the purpose of construing any part of the Act or of ascertaining the meaning of any word used in the Act but I am referring to it only for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill to introduce the same and the extent and urgency of the evil which he sought to remedy.
Those are all matters which, as already stated, must enter into the judicial verdict as to the reasonableness of the restrictions which article 19 (5) permits to be imposed on the exercise of the right guaranteed by article 19 (1)(f).
Further, there is another significant fact which does not appear to have been pressed on the attention of the High Court.
The Bill had been.
introduced in the Legislature on the 23rd March, 1949, and was referred to a select committee.
On the 25th April, 1949, when the Bengal Legislature was not in session West Bengal Ordinance No. 1 of 1949 was passed, The two preambles to that Ordinance recited as follows: "Whereas it is expedient, pending the enactment of further legislation, to provide for the temporary stay of certain suits, proceedings and appeals in pursuance of the Act: And whereas the West Bengal Legislature is not in session and the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action '" The fact that an Ordinance had to be passed pending the passing of this Bill and the preambles to the (1) ; 629 Ordinance do undoubtedly indicate that, in the opinion of the authorities, the then prevailing conditions disclosed a serious evil which urgently necessitated the taking of immediate action.
Further, it appears from the judgment delivered by the High Court on the application subsequently made by the State for leave to appeal to this court that a number of cases were pending before the courts in which the same question was involved.
This is also a circumstance which was not brought to the notice of the High Court before the judgment under appeal was pronounced.
Finally, in the judgment under appeal I find no reference to the proviso to the new section 37 which enlarges, as it were, by way of compensation for the loss of the right of ejectment, the purchaser 's right to claim enhancement of rent much beyond the very limited right of enhancement of rent which, under the old section, was confined only to the fourth excepted under tenures.
Then there is the fact, found by the High Court, that land values had gone up so high that auction purchasers could now be found who, even without the right to eject the under tenants, would willingly pay a sum much in excess of the arrears of Government revenue which remains constant since the permanent settlement.
The cumulative effect of the foregoing facts which were not placed before the High Court much outweighs the consideration of the pecuniary loss of the respondent, Subodh Gopal Bose, as the auction purchaser and in the circumstances the infliction of the loss of the right to eject under tenants can only be regarded as a reasonable restriction permitted by article 19(5) to be imposed on the exercise of the right guaranteed under article 19(1) (f).
In my judgment the reasons for which the High Court declared section 7 of the amending Act to be ultra vires the Constitution are no longer tenable in view of the circumstances now before us which were not brought to the notice of the High Court and the decision of the High Court cannot, therefore, be sustained.
An alternative argument, however, has been raised by learned advocate for the respondent, Subodh Gopal Bose, that the impugned section violates the 630 fundamental right secured to him by article 31(2) of the Constitution and is, therefore, void under article 13(1).
The contention, shortly put, is that the right, conferred by the old section 37 to avoid and annul the under tenures and to eject the under tenants is, by itself,"property" anti that as the new section 37 has taken away that property without having made any provision for I compensation there for the impugned section is unconstitutional in that it violates the provisions of article 31 (2).
The Bill which eventually became the Bengal Land Revenue Sales (West Bengal Amendment) Act, 1950, was introduced in the West Bengal Legislature on the 23rd March, 1949, and after having been passed by the Legislature it received the assent of the Governor on the 15th March, 1950.
The Bill was, therefore, pending in the West Bengal Legislature when the Constitution ,of India came into force and was passed into law after the date of the Constitution.
It does not appear, however, that the Bill was reserved for the consideration of the President or received his assent.
Therefore, the impugned law cannot claim the protection of article 31 (4) and, what is more, if it is such a law as is referred to in clause (2) of article 31, then, by virtue of clause (3), it cannot have any effect at all.
The question, therefore, is as to whether the impugned section is or is not such a law as is referred to in article 31(2).
The question requires, for a proper answer, a close scrutiny of the provisions of article 31 and other relevant articles of the Constitution bearing on it.
At the outset it is well to bear in mind the decision of this court in A.K. Gopalan 's case(1), explaining the correlation between the provisions of sub clauses (a) to (e) and (g) of clause (1) of article 19 and articles 20, 21 and 22 of the Constitution.
Kania C.J., at page 101, my Lord the present Chief Justice at pages 191 192, Mahajan J., at page 229, Mukherjea J., at pages 255256 and I at pages 302 306 expressed the view that the validity of the Preventive Detention Act could not be judged by the provisions of article 19.
The majority ; 631 of the Bench took the view that the rights conferred by article 19(1) (a) to (e) and (g) could be enjoyed only so long as the citizen was free and had the liberty of his person but that, the moment he was lawfully deprived of his personal liberty under article 21 he ceased to have the rightsguaranteed by article 19 (I) (a) to (e) and (g).
The result of this part of the deci sion in A.K. Gopalan 's case(1) was summarised in the later case of Ram Singh vs The State of Delhi(2), by my Lord the present Chief Justice in the judgment that he delivered on behalf of himself, Kania C. 1,and myself.
Said his Lordship at pages 455 456: "Although personal liberty has a content sufficiently comprehensive to includei the freedoms enumerated in article 19 (1), and its deprivation would result in the extinction of those freedoms, the Constitution has treated these civil liberties as distinct fundamental rights and made separate provisions in article 19 and articles 21 and 22 as to the limitations and conditions subject to which alone they could be taken away of abridged.
The interpretation of these articles and their correlation were elaborately dealt with by the full court in Gopalan 's case(1).
The question arose whether section 3 of the Act was a law imposing restrictions on "the right to move freely throughout the territory of India" guaranteed under article 19 (1) (d) and, as such, was liable to be tested with reference to its reasonableness under clause (5) of that article.
It was decided by a majority of 5 to 1 that a law which authorises deprivation of personal liberty did not fall within the purview of article 19 and its 'validity was not be judged by the criteria indicated in that article but depended on its compliance with the requirements of articles 21 and 22, and as section 3 satisfied those requirements, it was constitutional." Mahajan J., who by a separate judgment dissented from the majority on another point, not material for our present purpose, said at page 467: "On the other points argued in the case I agree judgment of Sastri J." (1) ; (9) ; 632 It must, therefore, be regarded as settled that the freedom referred to in article 19 (1) sub clauses (a) to (e) and (g) are guaranteed to a citizen of India while he is a free man.
These freedoms, even when they are so available, are, however, not absolute and unbridled licence but are subject to social control in that reasonable restrictions may be imposed on them by law as indicated in clauses (2) to (6) of article 19.
But as soon as the citizen is lawfully deprived of his personal liberty as a result of detention, punitive or preventive, he loses his capacity to exercise the several rights enumerated in sub clauses (a) to (e) and (g) of article 19 (1) and cannot complain of the infraction of any of those rights.
The validity of the law which deprived a citizen of his personal liberty which inevitably destroys his rights under the sub clauses mentioned above cannot be judged by the test of reasonableness laid down in clauses (2) to (6) of article 19 but falls to be determined according to the provisions of articles 20, 21 and 22 of the Constitution.
This, I apprehend, is the result of the two decisions of this court referred to above.
Such being the correct correlation between article (1) sub clauses (a) to (e) and (g) on the one hand and article 21 on the other, the question necessarily arises as to the correlation between article 19 (1)(f) and article 31.
Article 19 (1)(f) guarantees to a citizen,as one of his freedoms, the right to acquire, hold and dispose of property but reasonable restrictions may be imposed on the exercise of that right to the extent indicated in clause (5).
Article 31, as its heading shows guarantees to all persons, citizens and non citizens the "right to property" as a fundamental right to the extent therein mentioned.
What, I ask myself, is the correlation between article 19 (1) (f) read with article 19 (5) and article 31 ? If, as held by my Lord in A.K. Gopalan 's case(1) at page 191, sub clauses (a) to (e) and (g) of article 19 (1) read with the relevant clauses (2) to (6) "presuppose that the citizen to whom the possession of these fundamental rights is secured retains the substratum of personal freedom on which alone the enjoyment of these rights necessarily (1) ; 633 rests", it must follow logically that article 19 (1)(f) read with article 19 (5) must likewise presuppose that the person to whom that fundamental right is guaranteed retains his property over or with respect to which alone that right may be exercised.
I found myself unable to escape from this logical conclusion and so I said in A.K. Gopalan 's case at pages 304 305: "But suppose a person loses his property by reason of its having been compulsorily acquired under article 31 he loses his right to hold that property and cannot complain that his fundamental right under subclause (f) of clause (1) of article 19 has been infringed.
It follows that the rights enumerated in article 19 (1) subsist while the citizen has the legal capacity to exercise them.
If his capacity to exercise them is gone, by reason of lawful conviction with respect to the rights in sub clauses (a) to (e) and (g), or by reason of a lawful compulsory acquisition with respect to the right in sub clause (f), he ceases to have those rights while his incapacity lasts.
" I reiterated the same opinion in my judgment in ChiranJitlal 's case(1).
Nothing that I have heard on the present occasion has shaken the opinion I expressed in those cases as to the correlation of article 19 (1) (f) read with article 19 (5) and article 31 of our Constitution.
A suggestion was thrown out by my Lord in course of arguments, that article 19 (1) (f) was concerned only with the abstract right and capacity to acquire, hold and dispose of property and had no reference or relation to any rights in any particular property but that article 31 only was concerned with the right to a concrete property and there was no correlation between the two articles.
The matter, however, was not argued by either side and I am not prepared to express any final opinion on it.
For the purpose of this appeal I am content to proceed on the footing that article 19 relates to abstract right as well as to right to concrete property.
(I) ; at p. 919. 4 95 S.C.I./59 634 I now turn to article 31 which appears under the heading "right to Property".
The clauses of that article which are material for the purposes of determining the question in debate run as follows : "(1) No person shall be deprived of his property save by authority of law.
(2) No property, movable or immovable, including any interest in, or in any company owing, any commercial or industrial undertaking, shall be taken possession 01: or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given.
* * * * (5) Nothing in clause (2) shall affect (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply, or (b) the provisions of any law which the State may hereafter make (i) for the purpose of imposing or levying any tax or penalty, or (ii) for the promotion of public health or the prevention of danger to life or property, or (iii) 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 country, or otherwise, with respect to property declared by law to be evacuee property.
" It is suggested that the two clauses are not mutually exclusive but must be read together and that they are only concerned with what has been described as the State 's power of eminent domain which, according to Professor Willis, means the legal capacity of sovereignty, or one of its governmental organs, to take private property for a public use, upon the 635 payment of just compensation.
Reference is made to certain passages culled from the works of eminent ancient writers like the Dutch publicist and statesman Hugo Grotius who flourished in the ' 17th century and William Blackstone the celebrated English jurist who wrote his Commentaries round about 1769 and from Judge Cooley 's well known book on Constitutional Limitations to show that from early times jurists have insisted on three things as pre requisites for 'the exercise of this power of eminent domain, namely, (1) the authority of law, (2) the requirement of public use, and (3) the payment of just compensation.
These three prerequisites which constitute limitations on the power of eminent domain are said to have been epitomised in 1791 in the last two clauses of the Fifth Amendment to the Constitution of the United States of America.
The contention is that article 31 reproduces those three limitations on the power of eminent domain, namely, that clause (1) announces the necessity for legislative sanction as a pre requisite for the exercise of the power, thus protecting all persons against expropriation by the State acting through its executive organ, the Government, and that ' clause (2) reproduces the necessity of a public purpose and payment of compensation.
It is concluded that these important limitations on the State 's power of eminent domain are designed to protect a person against arbitrary deprivation of his property and they constitute his fundamental right in relation to his property.
The proposition thus formulated is certainly attractive and, indeed, has found favour with my learned colleagues but appears to me to be open to certain objections.
I say in all humility that I consider the method of approach and the line of reasoning in support of that proposition entirely fallacious and wrong.
The steps in the argument seem to be (i)that the power of eminent domain and the limitations thereon as explained by eminent jurists are incorporated in the Fifth Amendment to the Constitution of the United States, (ii) that clauses (1) and (2) of article 31 are concerned with the same topic of 636 eminent domain and (iii) that, therefore, clauses (1) and (2) of article 31 must be read as having reproduced the same limitations on the power of eminent domain.
This line of reasoning amounts, in effect, to likening one thing with another thing and then saying that as that other thing means such and such this thing must, therefore, bear the same meaning a method which has been deprecated by Lord Halsbury in Styles ' case(1).
Further, if this line of reasoning were correct or permissible then we might as 'well have said,as indeed we were asked to say, that article 21reproduced the American constitutional limitationsa gainst deprivation of life and personal liberties and that, therefore, the expression "procedure established by law" to be found in article 21 meant exactly what the expression "dueprocess of law" occurring in the Fifth Amendmentdid.
This we resolutely and definitely declinedto do in A. K. Gopalan 's case (supra).
At page 108 of the report of that case Kania C I expressed the view that that line of reasoning was not proper and was misleading.
My Lord the present Chief Justice ' at page '197 repelled that contention.
After quoting the words of Madison about the great and essential rights of the people" my Lord concluded at page 199: "This has been translated into positive law in Part III of the Indian Constitution, and I agree that in construing these provisions the high purpose and spirit of the Preamble as well as the constitutional significance of a Declaration of Fundamental Rights should be borne in mind.
This, however, is not to say that the languageof the provisions should be stretched to square withthis or that constitutional theory in disregard of the cardinal rule of interpretation of any enactment, constitutional or other, that its spirit, no less than its intendment should be collected primarily from the natural meaning of the words used".
After noticing the argument of learned counsel for the petitioner Mukherjea J. at page 266 et scq found (1) ; 637 It impossible to introduce the American doctrine of due process of law into our article 21.
If the language of our articlc 21 could not be stretched to square with the American due process clause so as to give effect to the suggested enlargement of the scope of our fundamental right to life and personal liberties but had to be interpreted by giving the words their ordinary natural meaning I cannot see why the language of article 31 should not bc construed in the usual way so as to give effect to the plain intention our Constitution makers.
I say with the utmost humility that the proper method of approach is to adopt the golden rule of construction referred to in the judgment of my Lord quoted above and not to start off with any kind of assumption that our Constitution must be regarded as having reproduced this or that doctrine.
Apart from the erroneous line of reasoning referred to above, the conclusion arrived at by following that reasoning appears to me to be open to serious objections on merits also.
If it were correct to say that the two.
clauses, (1) and (2), of article 31 deal with the same topic of the State 's power of eminent domain which is inherent in its sovereignty then, as I pointed out in my judgment in Chiranjitlal 's case(1) at page 925, clause (1).
must be held to be wholly redundant and clause (2) by itself would have sufficed, for the necessity of a law is quite clearly implicit in clause (2) itself which alone would have served as a protection against State action through its executive organ, the government.
Another and more serious objection against reading both the clauses as dealing only with the same topic of eminent domain is, as pointed out by me in Chiranjitlals case (supra), that such construction will place the deprivation of property otherwise than by the taking of possession or acquisition of it outside the pale of all constitutional protection.
As I said there and as I shall also do hereafter in detail, one can conceive of circumstances where the State, in exercise of the State 's police power, may have to deprive a person of his property without taking possession of it or acquiring it within the meaning of (1) ; 638 article 31(2).
This police power of the State is also one of the powers inherent in the sovereignty of the State.
The suggestion that the first two clauses of article 31 should be read as dealing only with eminent domain will, if accepted, lead us to hold that our Constitution has not dealt with the State 's police power to deprive a person of his property and has not provided for us any protection against the State by imposing any limitation on the exercise of that power.
The suggested construction will render the enunciation of our fundamental "Right to property" patently incomplete.
It has been urged that the State 's police power is recognised and regulated by article 19 clauses (2) to (6) and article 31 (5) (b).
I shall deal with that argument in detail hereafter and show that it is quite untenable.
Apart from that argument, the result of reading article 31, clauses (1) and (2) together will be to hold that our Constitution has not provided for us any protection against the exercise of the State 's police power either by the Legislature or by the executive.
Such a conclusion I am not prepared to accept.
Accordingly I thus explained what I conceived to be the true scope and effect of clauses (1) and (2) of article 31 in Chiranjitlal 's case (supra) at page 925, namely, that clause (1) deals with deprivation of property in exercise of police power and enunciates the restriction which our Constitution makers thought necessary or sufficient to be placed on the exercise of that power, namely, that such power can be exercised only by authority of law and not by a mere executive fiat and that clause (2) deals with the exercise of the power of eminent domain and places limitations on the exercise of that power.
It is these limitations which constitute our fundamental right against the State 's power of eminent domain.
The language used in article 31(2) clearly indicates beyond doubt that the power of eminent domain as adopted in our Constitution is concerned with only that kind of deprivation of property which is brought about by the taking of possession or acquisition contemplated by that clause.
I again adverted to this matter in The State of Bihar vs Maharajadhiraja 639 Kameshwar Singh of Darbhanga(1 ).
It is said that such a construction of article 31(1) instead of enunciating any fundamental right of the people at all will, on the contrary, declare the fundamental right of the Legislature to deprive a person of his property by merely.
enacting a law.
This appears to me to be a very superficial.
criticism which completely overlooks that article 31(1), as far as it goes, does lay down a fundamental right by imposing a limitation at least on the executive power.
It is this limitation placed on the executive power that constitutes our fundamental right to property under article31(1).
I see no compelling or cogent reason for changing the views I expressed on this point in my judgments in those two cases.
It is necessary, at this stage, to examine the several other objections that have been taken to the correctness of the interpretation suggested by me.
It is said that the State 'section police power in relation to the citizens ' right to freedom is fully recognised in article 19.
Clause (1) of that article secures to the citizens of India seven specified rights but clauses (2) to (6) permit the State to make laws imposing reasonable limitations on the exercise of these seven rights as therein mentioned.
The argument is that clauses (2) to (6)recognise the police power of the State in that they permit it to make laws imposing restrictions on the seven rights of the citizens and that they at the same time regulate that power by placing limitations upon it by requiring that the restrictions which may be imposed must be reasonable.
It is then pointed out that the State 's police power is further saved by article 31(5) (b) and it is concluded that the police power having been recognised and provided for in article 19 and article 31(5) (b) there is no necessity to read article 31(1) as concerned with the State 's police power at all.
I see no force or validity in the aforesaid objection.
I first deal with the objection in so far as it is founded on the recognition of the State 's police power in (1) at pp.
988 989.
article 19.
I say that there is no force in this objection for the following reasons: (a) article 19(1) enumerates seven rights to freedom and guarantees them to the citizens of India.
Clauses (2) to (6) of that article recognise and regulate the exercise of police power over those rights by the State through its legislative organ, for the State is, by those clauses, permitted to impose reasonable restrictions by law only.
Therefore, it follows that article 19 does not give any protection to the citizens against the executive government in respect of even those seven rights.
The citizens, however, have protection against the executive as well as the Legislature under article 21 but that protection covers life and personal liberties only.
Where, then, is the citizen 's protection against the exercise of police power by the executive over his property? It is nowhere except in article 31(1) as construed by me.
(b) Article 19 guarantees the seven rights of the citizens only and recognises and regulates the exercise of police power over those rights by the legislative organ of the State.
A non citizen is entirely outside that article and consequently he has none of those seven rights and has no protection against the State under that article.
He has, therefore, to fail back upon article 21 and contended that all his personal liberties including the six rights enunciated in article 19(1)(a) to (e) and (g)are protected against the exercise of police power by the State through its executive or legislative limb.
But article 21, as already observed, only protects him from deprivation of life and personal liberties.
Where, then, is the non citizen 's protection against deprivation of his property by the exercise of police power by the executive government.
It is no where unless article 31(1) is read in the way I have suggested.
(c) Finally, clauses (2) to (6) of article 19 authorise the State to make laws imposing reasonable "restrictions" on the citizen 's rights under clause (1).
It is true that in A. K. Gopalan 's case (supra) Fazl Ali J. in his dissenting judgment took the view that 641 "restrictions" might cover the case of total deprivation, but none of the other members of that Bench accepted that position.
Kania C.J. said at page 106: "Therefore, article 19 (5) cannot apply to a substantive law depriving a citizen of personal liberty.
I am unable to accept the contention that the word 'deprivation ' includes within its scope "restriction" when interpreting article 21".
My Lord the present Chief Justice expressed his views at p. 191 in the words following: "The use of the word 'restrictions ' in the various sub clauses seems to imply, in the context, that the rights guaranteed by the article are still capable of being exercised, and to exclude the idea of incarceration though the words 'restriction ' and 'deprivation ' are sometimes used as interchangeable terms, as restriction may reach a point where it may well amount to deprivation.
Read as a whole and viewed in its setting among the group of provisions (articles 19 22) relating to 'Right to Freedom ', article 19 seems to my mind to presuppose that the citizen to whom the possession of these fundamental fights is secured retails the substratum of personal 'freedom on which alone the enjoyment of these rights necessarily rests".
The contrary view expressed by a Bench of the Allahabad High Court was rejected by my Lord at the end of page 193 with the following remark: " . . their major premise that deprivation of personal liberty was a 'restriction ' within the mean ing of article 19 is, in my judgment, erroneous '.
Mahajan J. expressed the same view in the following passage at page 227 in his judgment in that case: "Preventive detention in substance is a negation the freedom of locomotion guaranteed under article 19(1)(d) but it cannot be said that it merely restricts it".
Mukherjea J. said at page 256: . . and the purpose of article 19 is to indicate the limits within which the State could, by legislation, 642 impose restrictions on the exercise of these fights by the individuals.
The reasonableness or otherwise of such legislation can indeed be determined by the court to the extent laid down in the several clauses of ' article 19, though no such review is permissible with regard to laws relating to deprivation oflife and personal liberty".
His Lordship concluded thus at page 264: "The result is that, in my opinion, the first contention raised by Mr. Nambiar cannot succeed and it must be held that we are not entitled to examine the reasonableness or otherwise of the Preventive Detention Act and see whether it is within the permissible bounds specified in clause (5) of article 19".
After discussing the matter at some length at pages 302 305 I concluded on page 306: "In my judgment article 19 has no beating on the question of the validity or otherwise of preventive detention and, that being so, clause (5) which prescribes a test of reasonableness to be defined and applied by the court has no application at all".
A suggestion was made that although in A.K. Gopalan 's case (supra) the word "restriction" occurring in clauses (2) to (6) could not, in its application to, sub clauses (a) to (e) and (g) be taken as extending to "deprivation ", there is no compelling reason to hold that the word "restriction" occurring in clause (5) may not in its application to sub clause (f) cover "derivation" There is no substance in this contention.
Clause (5) covers sub clauses (d), (e) and (f) and surely one and the same word "restriction" used in one and the same clause (5) cannot have one meaning in its application to sub clauses (d) and (e) and a different meaning and connotation in its application to subclause (f).
Further, the reasons why, in A.K. Gopalan 's case (supra), that word was given a narrower meaning in its application to sub clauses (a) to (e) and (g) apply mutatis mutandis in its application to sub clause (f) read ' in correlation to article 31.
It is, therefore, clear from the decision of this court in A.K. Gopalan 's case (supra) that article 19 does not give any protection 643 against deprivation of property as distinct from mere restriction imposed on the right 'to property.
For protection against deprivation of life and personal liberties including the several rights to freedom enunciated in sub clauses (a) to (e) and (g) of article 19 by the exercise of police power by the legislative or the executive organ of the State the citizen as well as the non citizen will have to look to article 21.
For protection against the deprivation of property by legislative or executive State action both the citizen and the non citizen will have to rely on article 31.
If, as I shall show presently, clause (5) (b) were inserted in article 31 ex abundanti cautela and not as a substantive provision defining the ambit or scope of the police power or formulating any limitation on that power, then the protection against deprivation of property will have to be derived from only clauses (1) and (2).
If, in such circumstances, both those clauses are read in the way suggested by learned counsel for the respondent, Subodh Gopal Bose, namely, as dealing only with the topic of the State 's power of eminent domain then there will remain no escape from the conclusion that in the Republic of India neither a citizen nor a non citizen has any constitutional protection against the exercise of police power either by the legislative or executive organ of the State.
On the other hand, if the construction suggested by me be adopted, everybody, citizen or non citizen, will have, under article 31 (2), full protection against the exercise the power of eminent domain by both the executive as well as Legislature and in addition to that will also have protection against the exercise of police power over property by the executive.
The preservation of this protection alone, even if some may regard it as very meagre, is, to my mind, a sufficiently cogent reason for adopting the construction suggested by me in preference to the other construction which, if adopted, will not save even this meagre protection.
The next objection to the conclusion arrived at by me is that police power of depriving a person of his property is amply provided for in article 31 (5) (b) and it is not necessary to read it into article 31 (1).
644 A perusal of clause (5) of article 31 which 1 have already quoted will at once show that that clause excepts certain laws from the operation of clause (2) only.
It will also appear that the exception covers, under sub clause (b), only certain kinds of future laws.
Item (i) under sub clause (b) comprises future laws imposing or levying any tax or penalty.
Item (ii) under that sub clause saves future laws for the promotion public health or the prevention of danger to life or property.
It is said that this clause (5)(b)(ii)saves laws to be made in exercise of the State 's police power.
The argument is that the State 's police power of imposing "restriction" on the citizens ' right to acquire, hold and dispose of property is recognised and controlled by clause (5) of article 19 and that when it becomes necessary for the police power to extend beyond "restrictions" and to inflict "deprivation" property it can do so by the kind of law which is, by clause (5)(b) (ii) of article 31, saved from the operation of clause (2).
It is pointed out that in the matter of imposition of "restrictions" on the exercise of the right to acquire, hold and dispose of property the only limitation on the police power is that the "restrictions" to be imposed by law must be reasonable as indicated in article 19 (5) but that in the matter of "deprivation" of property by authority of law under article 31 the limitation on the police power is more 'stringent, namely, that such law may be made only for the promotion of public health or the prevention of danger to life or property as mentioned in clause (5) (b) (ii) and for no other purpose.
The argument thus formulated is attractive for its simplicity and has the appearance of plausibility but cannot stand the test of close scrutiny.
I say so far the following reasons : (i) Every student of Constitutional law is well aware that constitutional lawyers classify the State ' sovereign power into three categories, namely, the power of taxation, the power of eminent domain and the police power.
These are distinct categories of sovereign powers with different connotations subserving different needs of the society and the State.
If both 645 clauses (1) and (2) of article 31 deal with and impose restrictions only on the State 's 'power of eminent domain, then there was no real necessity for exempting by article 31 (5)(b)the taxation power or the police power from the operation of the power of eminent domain, for, ex hypothesis, the two first mentioned powers, being distinct from the power of eminent domain, did not and could not fail within the last mentioned power and, therefore, needed no exemption.
Even a casual student of Constitutional law knows that money is one of the kinds of property which, it is said, cannot be taken in exercise of the State 's power of eminent domain and that being so there could be no necessity for exempting laws imposing taxes from the operation of article 31 (2) which embodies only the doctrine of eminent domain.
Further, the police power, like the pOwer of taxation and the power of eminent domain, is an attribute of sovereignty itself.
It is, as Professor Willis calls it, "the offspring of political necessity".
This coercive legal capacity is inherent in every sovereign and requires no specific reservation.
Indeed, in the Constitution of the United States there.
is no specific reservation of the police power of the State.
There was, therefore, no necessity for expressly saving the police power of our State by a constitutional provision.
Why, then, was clause (5) (b) (ii) inserted in article 31 at all ? The answer will become obvious if it is remembered that it is extremely difficult to define precisely the ambit and scope of the State 's police power over or in relation to private property and some of the instances and forms of the exercise of such police power over or in relation to property may superficially resemble the exercise of the power of eminent domain.
The conclusion, therefore, becomes irresistible that although clause (5)(b)(ii) was not strictly speaking necessary for saving the police power, nevertheless, our Constitution makers, out of abundant caution and with a view to avoid any possible argument, thought fit to insert sub clause (5) (b) (ii)in article 31.
It is impossible to hold that the entire police power of the State to deprive a person of his property is contained in that sub clause.
646 (ii) According to the argument article 31 (5)(b) saves the power of ' the State to make certain laws in exercise of its power of taxation or its police power.
It will be noticed that it does not give us any protection against the Legislature by laying down any test for the validity of those laws.
The acceptance of the suggested construction will mean that laws thus saved may be as archaic, offensive and unreasonable as the legislature may choose to make them so long as they relate to the subjects referred to in that sub clause.
If our sense of the sanctity of private property is not shocked at the prospect of leaving our property at the unfettered mercy of the Legislature in respect of laws of the kind specified in clause (5) (b) (ii), I do not see why the construction suggested by me should be rejected only on the ground that it will give a carte blanche to the Legislature to make any law it pleases for the deprivation of property in exercise of police power.
(iii) Article 31 (5) (b) gives us no protection against the executive with respect to the exercise of these powers.
Take article 31 (5)(b)(i)first.
That it was.
not intended to be a protection against the executive in the exercise of the power of taxation cannot for a moment be doubted, for if it were so intended, there was no necessity, then, for inserting into the Constitution article 265 providing that no taxes.
shall be levied or collected except by authority of law, which clearly means that the executive cannot, on its own authority, levy or collect any tax.
It is, therefore, quite plain that article 31 (5)(b)(i)was not designed to give any protection against the executive in the matter of the exercise of the power of taxation and that our Constitution makers, precisely for that reason, considered that it was necessary that such protection should be given expressly and, therefore, inserted article 265.
Likewise, article 31 (5)(b)(ii) saves certain laws and does not in terms give us any protection against the exercise of police power by the executive.
Where, then, is our protection against deprivation of property by the exercise of police power by the executive Government? It is nowhere to be 647 found in our Constitution except in article 31(1).
This, to my mind, clearly indicates that article 31(1)was designed to formulate a fundamental right against deprivation of property by the exercise ' of police power by the executive arm of the State.
The protection against the exercise of the power of eminent domain by the executive government is to be found in the requirement of a law which alone may authorise the taking of possession or the acquisition of the property which, as will be explained later, is implicit in article 31(2) itself and it is, therefore, not necessary to have recourse to article 31(1) to secure that protection.
(iv) To say that the entire police power of the State to deprive a person of his property is to be found only in article 31(5)(b)(ii) will be to confine the exercise of that power by the Legislature within a very narrow and inelastic limit, namely, only for the promotion of public health or the prevention of danger to life or property.
On the assumption that article 31 (5)(b)(ii) is concerned with saving the police power it may cover the laws authorising the destruction of rotten or adulterated foodstuff or the pulling down of a dangerous dilapidated building or the demolition a building to prevent fire from spreading.
But it is quite easy to contemplate laws which do not fall within article 31 (5) (b) (ii) but are, nevertheless, made mistakably in exercise of the State 's police power.
Consider the case of a law authorising the seizure and destruction of, say, obscene pictures or blasphemous literature.
Such law is clearly necessary for the promotion or protection of public morality.
Nobody can for a moment think of contending that such law will be void if it does not provide for compensation and yet that will be the result if we are to accept the suggested construction, for such a law made for protecting public morality is obviously not covered by article 31 (5)(b)(ii) and will, according to such construction, be hit by article 31(2).
A construction which leads to the astounding result of compelling the State to buy up obscene pictures and.blasphemous literature if it desires to preserve public morality cannot merit serious consideration and must be discarded at once.
Take 648 the case of a law providing for the compulsory contribution by all banks based upon the average daily deposits for the purpose of creating a guarantee fund to secure the full repayment of deposits to all depositors in case any such bank becomes insolvent and i$ ordered to be wound up.
This law quite clearly deprives the banks of property in the shape of their respective contributions and it is not covered by clause (5) (b) (i) as it cannot be said to impose a tax or a penalty and does not fail within (5) (b) (ii) either, for it is not a law for the promotion of public health or for the prevention of danger to life or property.
This law being thus outside clause (5)(b)cannot, according to the suggested construction be supported as an instance of exercise of police power for, ex hypothesis the entire police power with regard to deprivation of property is contained in clause (5)(b)and consequently the law I have mentioned will not be protected from the operation of article 31(2) and must be void for not providing any compensation.
Yet in the United States where so much is made of the sanctity of private property and from where we are prone to draw inspiration in these matters such a law has been upheld as ,constitutional, as an instance of a valid exercise of the State 's police power "which extends to all the great public needs.
" [See Noble State Bank vs Haskell(1)].
Again, suppose there is a labour dispute between, say, a tramway company and its workers and the running of the tram cars is stopped.
A law which in such circumstances authorises the State to take possession of the tram depot and run the tram cars by the military or other personnel during such emergency for the convenience of the travelling public is not within clause (5)(b)(ii) and on this construction will be void if it does not provide for compensation to the tramway company.
On the suggested construction pushed to its logical conclusion it will not be possible in future to impose any social control on the profiteers or blackmarketeers, for a law controlling and fixing prices of essential supplies will always deprive them of property of the value to be measured by the difference between (1) ; 649 the blackmarket price and the controlled price.
The suggested construction may even make it difficult to support any future law containing provisions similar to those in the procedure codes or other laws not strictly falling within the clause (5)(b)(ii)but authorising the seizure of books, documents or other property or the appointment of a receiver or sequestrator to take possession of property, for in all such cases there will be a "deprivation" of property.
It is unnecessary to multiply instances.
The several instances I have just given above appear to me to furnish ample justification for rejecting a construction which may make it impossible for the State to undertake beneficial legislation to promote social interest and may invalidate laws of the kind I have mentioned.
(v) Article 31 (5) (b) (ii) saves from the operation of clause (2) laws to be made in future for the promotion of public health or the prevention of danger to life or property.
Obviously it was contemplated that the laws thus saved would involve the taking of possession or acquisition of private property, for otherwise there would be no necessity for the exemption at all.
Take the case of a law authorising the opening out of a congested part of a town and the acquisition of land for the laying out of a public park for affording fresh air and other health amenities to the public.
Consider the case of a law authorising the clearing up of slums and the closing down of putrid and unhealthy surface drains and acquisition of land for broadening the lanes so as to lay underground sewers thereunder.
One may also refer to a law authorising the acquisition of land for the erection of a hospital for patients suffering from infectious diseases, e.g., plague, small pox and cholera.
All these laws will ,come under the heading of promotion of public health or the prevention of danger to life.
According to the suggested construction the acquisition of property authorised by each of these laws will be exempt from payment of compensation to the owner, for these laws are, by clause (5)(b) (ii) exempted from article 31(2).
And yet acquisition of land for such public purposes is precisely the kind of acquisition which is always made on payment of 5 95 section
C.I.159 650 compensation under the Land Acquisition Act 1894.
A construction which takes a law made really and essentially in exercise of the power of eminent domain out of article 31(2) cannot readily be accepted as cogent or correct.
(vi) The complexities of modern States constantly give rise to conflicts between opposing social interest and it is easy to visualise circumstances when much wider social control legislation than is envisaged or recognised in the laws referred to in article 31(5)(b) will be imperatively necessary.
Indeed, as Professor Willoughby states in his Constitutional Law of the United States, Vol.
III, p. 1774, "the police power knows no definite limit.
It extends to every possible phase of what the Courts deem to be the public welfare".
In the language used by Holmes J. in Noble State Bank vs Haskell (supra), "it may be said in a general way that the police power extends to all the great public needs".
In Eubank vs Richmond(1) the Court said of the police power: "It extends not only to regulation which promote the public health, morals, and safety, but to those which promote the public convenience or the general prosperity .
It is the most essential of powers, at times most insistent, and always one of the least limitable of the powers of government." And all the more will such wide police powers be required in a State which, ' like our own, aims at being a welfare State governed by the directive principles of State policy such as are to be found in Chapter IV of our Constitution.
To so confine the State 's police power as suggested by learned advocate for the respondent will be to bring about social stagnation and thereby to retard the progress of our State.
There is nothing in the language of our Constitution which compels us to adopt such a construction.
In my judgment a construction which is calculated to produce the undesirable result I have mentioned must, I feel sure, be rejected.
(1) ; 651 The last objection to reading article31(1) as the enunciation of the fundamental right against deprivation of property by the exercise of police power and reading article 31(2)as laying down limitations on the State 's power of eminent domain is that so read article 31 will, in reality, afford no effective protection at all, for the State will always exercise its police power under article 31 (1) and deprive a person of his property without any compensation by the simple device of making a law and will never exercise its power of eminent domain under article 31(2).
Where, then, it is asked, is our protection against the State with respect to our property ? The objection thus formulated overlooks the difference between the nature and purpose of the two powers which I shall presently discuss and explain and is not otherwise well rounded for the following ' reasons: (1) It is incorrect to say that article 31 (1) as construed by me gives no protection at all.
It certainly gives protection against deprivation of property by executive fiat just as did that part of the famous 29th Clause of the Magna Charta which proclaimed that no free person should be dispossessed of any free tenement of his except by the law of the land.
As pointed out by Mathews J. in joseph Hurtado vs People of California(1), by the 29th Clause of the Magna Charta the English Barons were not providing for security against their own body or in favour of the commons by limiting the power of Parliament but were protecting themselves against oppression and usurpation of the King 's prerogatives.
In other words, that clause of the Magna Charta was not designed as a protection against Parliament at all and indeed did not purport to formulate any limitation on the Sate 's power of eminent domain but was only intended to be a protection against the exercise of police power by the highest executive, the King.
There is unmistakably a familiar ring in the language of our article 31(1) echoing the sound of the language of the 29th Clause of that great charter which the English Barons had wrested from their King.
The purpose and function (1) (1883) 10 U.g.
516 at p. 531. 652 of our article 31(1), as I apprehend it, are the same as those of the Magna Charta.
Our Constitution has given us ample protection against the executive in relation to all the three sovereign powers of the State.
Thus the executive cannot, on its own authority, and without the sanction of a law deprive any person of his life or personal liberty by reason of article 21 or of his property because of article 31(1) or take possession of or acquire private property under article 31 (2) or impose any tax under article 265. 'Our Constitution makers evidently considered the protection against deprivation of property in exercise of police power or of the power of eminent domain by the executive to be of greater importance than the protection against deprivation of property brought about by the exercise of the power of taxation by the executive, for they found a place for the first mentioned protection in article 31(1) and (2) set out in Part III dealing with fundamental rights while they placed the last mentioned protection in article 265 to be found in Part XII dealing with finance etc.
So with regard to all the three sovereign powers we have complete protection against the executive organ of the State.
(2) It is said we have no protection against legislative tyranny in respect of our property.
This complaint obviously is not well rounded, for our Constitution has given us some measure of protection against the legislature in respect of our property.
Thus if the State exercises its power of eminent domain by taking possession of or acquiring private property of any person it must do so upon the three conditions prescribed by article 31 (2).
There is no shorter cut in such a case.
Apart from this the citizens of India have further protection against the legislature in respect of their right to acquire, hold and dispose of property.
This right is guaranteed to them by article 19(1)(f).
The Constitution, however, recognises by clause (5) that the State has police power to restrict the right in the interest of the general public or for the protection of the interests of any Scheduled tribe but prescribes a limitation on this police power by requiring that the restrictions to be imposed by 653 law must be reasonable.
This requirement constitutes the citizens ' fundamental right against the exercise of police power by the legislature in respect of his fight under article 19 (1)(f)whilst they are in possession and enjoyment of this right.
(3) It is then urged that our Constitution, according to my construction of it, does not give us any protection against the legislature in the matter of deprivation of property in exercise of the State 's police power.
This is no ground for rejecting my construction, for, on the construction suggested to the contrary, the position is exactly the same, for article 31 (5) (b) only saves certain laws from article 31(2), that is to say, recognises the police power but does not formulate any test for determining the validity of those laws which may be as unreasonable as the legislature may make them.
Apart from this, what, I ask, is our protection against the legislature in the matter of deprivation of property by the exercise of the power of taxation ? None.
whatever.
By exercising its power of taxation by law the State may deprive uS, citizen or non citizen of almost sixteen annas in the rupee of our income.
What, I next ask, is the protection which our Constitution gives to any person against the legislature in the matter of deprivation even of life or personal liberty ? None, except the requirement of article 21, namely, a procedure to be established by the legislature itself and a skeleton procedure prescribed in article 22.
In A.K. Gopalan 's case (supra), notwithstanding the reference made to the epigrammatic observation of Bronson J. in Taylor vs Porte(1) to the effect that it sounded very much like the Constitution speaking to the legislature that the latter could not infringe our right unless it chose to do so, the majority of this Court declined to question the wisdom and policy of the Constitution or to stretch the language of article 21 so as to square it with its own notions of what the ambit of the right should be but felt bound to give effect to the plain words of the Constitution.
(See Kania C.J. at page 11, Mukherjea J. at page 277 and my judgment at page 321).
If, (1) 4 Hill 140.
654 therefore, in the matter of deprivation of property by the exercise of the State 's power of taxation our Constitution has only given us protection by article 265 against the executive but none whatever against the legislature and if, in the matter of deprivation of our life and personal liberty our Constitution has given us no better protection against the legislature than the requirement of a procedure to be established by the legislature itself: and the skeleton procedure prescribed by article 22, and seeking that our Constitution has, by article 31(2), given us protection against the legislature at least with respect to the exercise of the power of eminent domain, what is there to complain of ,if, in the matter 015 deprivation of property by the exercise of the State 's police power, our Constitution has, by article 31 (1), given us protection only against the executive but none against the legislature ? What is abnormal if our Constitution has trusted the legislature, as the people of Great Britain have trusted their Parliament ? Right to life and personal liberty and the right to private property still exist in Great Britain in spite of the supremacy of Parliament.
Why should we assume or apprehend that our Parliament or State legislatures should act like mad men and deprive us of our property without any rhyme or reason ? After all our executive government is responsible to the legislature and the legislature is answerable to the people.
Even if the legislature indulges in occasional vagaries, we have to put up with it for the time being.
That is the price we must pay for democracy.
But the apprehension of such vagaries can be no justification for stretching the language of the Constitution to bring it into line with our notion of what an ideal Constitution should be.
To do so is not to interpret the Constitution but to make a new Constitution by unmaking the one which the people of India have given to themselves.
That, I apprehend, is not the function of the court.
If the Constitution, properly construed according to the cardinal rules of interpretation, appears to some to disclose any defect or lacuna the appeal must be to the authority competent to amend the Constitution and not to the court.
655 (4) Further, there may be quite cogent and compelling reason why our Constitution does not provide for any protection against the legislature in the matter of deprivation of property otherwise than by taking of possession or acquisition of it.
It is futile to cling to our notions of absolute sanctity of individual liberty or private property and to wishfully think that our Constitution makers have enshrined m our Constitution the notions of individual liberty and private property that prevailed in the 16th century when Hugo Grotius flourished or in the 18th century when Blackstone wrote his Commentaries and when the Federal Constitution of the United States of America was framed.
We must reconcile ourselves to the plain truth that emphasis has now unmistakably shifted from the individual to the community.
We cannot overlook that the avowed purpose of our Constitution is to set up a welfare State by subordinating the social interest in individual liberty or property to the larger social interest in the rights of the community.
As already observed, the police power of the State is "the most essential of powers, at times most insistent, and always one of the least limitable powers of the government".
Social interests are ever expanding and are too numerous to enumerate or even to anticipate and, therefore, it is not possible to circumscribe the limits of social control to be exercised by the State or adopt a construction which will confine it within the narrow limits of article 31 (5) (b) (ii).
It must be left to the State to decide when and how and to what extent it should exercise this social control.
Our Constitution has not thought fit to leave the responsibility of depriving a person of his property, whether it be in exercise of the power of eminent domain or of the police power, to the will or caprice of the executive but has left it to that of the legislature.
In the matter of deprivation of property otherwise than by the taking of possession or by the acquisition of it within the meaning of article 31 (2) our Constitution has trusted our legislature and has not thought fit to impose any limitation on the legislature 's exercise of the State 's police power over 656 private property.
Our protection against legislative tyranny, if any, lies, in ultimate analysis, in a free and intelligent public opinion which must eventually assert itself.
Having dealt with the correlation between clauses (1) and (2) of article 31 as I apprehend it and having considered and rejected the objections to the conclusions I have arrived at, I proceed now to examine and analyse the provisions of clause (2).
As I explained in my judgment in the Darbhanga case (supra) at pp.
989 990, article 31 (2) has imposed three conditions on the exercise of the State 's power of eminent domain over private property and those limitations constitute the protection granted tO the owner of the property as his fundamental right.
It insists that this sovereign power may be exercised only if it is authorised by a law.
It is, therefore, clear that the executive limb of the State cannot ' exercise this power on its own authority and without the sanction of law.
The taking of possession or acquisition must be for a public purpose which implies that this power cannot be exercised except for implementing a public purpose.
It cannot be exercised for a private purpose.
What is a public purpose has been elaborately dealt with in that case and need not be discussed over again here.
Finally, the law authorising the taking of possession or acquisition of the property must provide for compensation.
Compensation, therefore, is payable only when the State takes possession of or acquires private property.
What, then, is the meaning of the words. "taken possession of or acquired", and their grammatical variations as used in article 31 (2) ? It is pointed out that the last clause of the Fifth Amendment which deals with eminent domain uses the word "taken" and it is suggested that as our article 31 (2) deals with the same topic of eminent domain it will be reasonable to hold that our article 31 (2) reproduces the American constitutional limitations and that, therefore, the expression "taken possession of or acquired" used in our article 31 (2) 657 must be read as having the same meaning which has been attributed , by the Judges of the Supreme Court of the United States to the word "taken" occurring in their Fifth Amendment.
I am quite unable to accept this construction and the line of reasoning on which it is founded.
In the first place, I deprecate the line of reasoning which starts by likening one thing with another and then ends by (imputing the qualities of the other thing to the first mentioned thing.
The cardinal rule of interpretation is to ascertain the meaning and effect of an enactment, constitutional or otherwise, from the words used 'therein.
If the words used have acquired a technical or special meaning, that meaning must be given to them.
To say that the expression "taken possession" of or acquired" must be read as "taken" and given.
the same wide meaning as the 'American courts have given to the word "taken" is to ignore the entire historical background of the law relating to compulsory acquisition of private property by the State.
Under the English law, on which 'more or less our modern laws are rounded, the term "acquisition" has a special meaning.
It connotes the idea of transfer of title, voluntary or involuntary.
When the acquisition by the State is effected by agreement after negotiation there is a regular conveyance transferring the title from the vendor to the State.
Even when the acquisition by the State is effected by the coercive process of exercising its sovereign power the idea of purchase is nevertheless present, for there is vesting of the property in the State by operation of law.
Acquisition of private property by the State under the English law, therefore, connotes the concept of a purchase, voluntary or involuntary, 'and involves a 'transfer of the entire title from the owner to the State or a third party for whom the State acquires 'the property.
In India, the compulsory acquisition of private property was first introduced by Bengal Regulation I of 1824.
Since then we have had no less 'than seven Acts dealing with the compulsory acquisition of private property by the State, namely, Act I of 1850, Act XLII of 1850, Act XX of 1852, Act I of 658 1854, Act.
XXII of 1863, Act X of 1870 and lastly the present Land Acquisition Act, Act I of 1894.
Each, of these Acts provides for the vesting of the acquired property in the State.
This means that the owner is divested and his title passes, by operation of law to the State.
The word "acquisition", therefore, has become, as it were, a word of art having a long accepted legislative meaning implying the transfer of title.
It will be quite wrong, according to the correct principles of interpretation, not to give the word "acquisition" and its grammatical variations this technical and special meaning I, therefore, respectfully agree with what Mukherjea J. said in Chiranjit Lal 's case (supra) at page 902, namely: "It cannot be disputed that acquisition means and implies the acquiring of the entire title of the expropriated owner, whatever the nature or extent of that title might be.
The entire bundle of rights which were vested in the original holder would pass on acquisition to the acquirer leaving nothing in the former.
In taking possession on the other hand, the title to the property admittedly remains in the original holder, though he is excluded from possession or enjoyment of the property.
Article 31 (2) of the Constitution itself makes a clear distinction, between acquisition of property and taking possession of it for a public purpose, though it places both of them on the same footing in the sense that a legislation authorising either of these acts must make provision for payment of 'compensation to the displaced or expropriated ' holder 'of the property.
In the context in which the, word "acquisition" appears in article 31 (2), it can only mean and refer to acquisition of the entire, interest of the previous holder by transfer of title and. . " It ' follows from what has been stated above that the word "acquired" used in article 31 (2) must be given the special meaning which that word has acquired and cannot be read as synonymous with: "taken" as used in the Fifth Amendment to the Constitution of the United States.
659 It is then suggested that any rate the expression "taken possession of" should be read in the sense in which the word "taken" is understood in the American law.
But even in America the word "taken" has not always been interpreted in the same way.
The old view was that in order to be a "taken" there must be either an actual taking of physical property or a physical occupancy of some physical property.
This view was, however, regarded as too narrow and mechanical.
It was said that the ownership of a thing, tangible or intangible, was made up of the rights, powers, privileges and immunities concerning that thing and that the property was not the thing itself but consisted of these rights, powers, privileges and immunities.
It was, therefore, concluded that there must be a "taking" whenever there was any injury to property otherwise than by the police power or taxation which, if done by a private individual, would be actionable as a tort; in other words that it must be held that there would be a "taking" whenever any of the rights, powers, privileges or immunities making up the ownership was taken from the owner.
Indeed, this wide interpretation of the word "taken" was facilitated by the fact that, in order to avoid the old, narrow view of the meaning of that word, many of the States so amended their Constitutions as to require compensation for property "damaged, injured or destroyed" for a public use.
(See Professor Willis ' Constitutional Law, pp. 820 821).
Our Constitution makers were well aware of the very wide meaning eventually given to the word "taken" by the American courts.
They did not, however, use the word "taken" in article 31 (2) which they would surely have done if they intended to reproduce the wide American concept of "taking".
Our Constitution makers, on the contrary, deliberately chose to adopt the narrower view point and accordingly used the words "taken possession of" in order to make it quite clear that they required compensation to be paid only when there was an actual taking of the property out of the possession of the owner or possessor into the possession of the State or its nominee.
Of course the manner of 660 taking possession must depend on the nature of the property itself.
I repeat with humility that it is not permissible to ignore the historical background and the actual words used in our Constitution.
It is finally said that both clauses (1)and (2)of article 31deal with the topic of eminent domain and, therefore,the expression "taken possession of or acquired"occurring in clause (2)has the same meaning which the word "deprived" used in clause (1) has In other words, both the clauses are concerned with deprivation of property and there is no reason to think that the expression "taken possession of or acquired" was usedin clause (2) to indicate any particular kind or shadeof deprivation.
The Obvious retort that at once comes to one 's mind is that if it were intended by our Constitution makers to convey the same general idea of deprivation of property by whatever means or mode it was brought about why did they use the word "deprived" in clause (1) and why did they use in clause (2) a different expression which, as commonly used and understood, connotes a much narrower meaning ? It would have been quite easy to frame clause (2) by using the word "deprived" instead of the expression "taken possession of oracquired".
As our Constitution makers used different expressions in the two clauses it must be held that they had done so for a very definite purpose and that purpose could be nothing else but to provide for compensation for only a particular kind of deprivation specifically mentioned and not for any and every kind of deprivation.
In this connection reference may be made to Entry 33 in List I, Entry 36 in List II and Entry 42 in List III of the Seventh Schedule.
The words used in those entries are "acquisition or requisitioning" ortheir grammatical variations.
The legislative powerbeing confined only to "acquisition or requisitioning"it will not be unreasonable to hold that "taking of possession" referred to in article 31 (2) is in the nature of "requisitioning".
In section 299 (2) of the Government of India Act the words "taking of possession" did not occur nor did they occur in any of the legislative lists in the Seventh Schedule to that Act, but they have 661 been introduced in article 31 (2) and in the three entries mentioned above the word "requisitioning" has been added after the word "acquisition".
If "taken possession of or acquired" occurring in article 31 (2) be given a meaning wider than what is meant by "acquired or requisitioned" or their variations used in the entries then it will amount to saying that article 31 (2) even contemplates a law with the respect to matters which are beyond the legislative powers conferred on Parliament and the State Legislatures, for they can only make a law with respect to "acquisition or requisitioning".
To counter this reasoning it is pointed out that Parliament under the Union List has the residuary power of legislation and, therefore, there is no difficulty in giving a wider meaning to the expression "taken possession of or acquired".
It will then amount to giving one and the same expression different meanings.
Thus in its application to a law made by the State Legislature "taken possession of or acquired" must perforce mean "requisitioned" or "acquired" whereas in its application to a law made by Parliament it will have a much wider meaning.
This is opposed to the cardinal rules interpretation.
Therefore, "taken possession of or acquired" should be read as indicative of the concept of "requisition or acquisition".
A further question, however, arises at this stage and it may be now considered.
Does every taking of a thing into the custody of the State or its nominee necessarily mean the taking of possession of that thing within the meaning of article 31 (2) so as to call for compensation ? The exercise of police power in relation to property may conceivably result in the extinction or destruction of the property or in the State taking the property in its control.
Take the case of the law authorising the municipal bailiff to seize rotten vegetables or adulterated foodstuffs and destroy them or to enter upon the property of a private owner to pull down the dilapidated structure. 'Consider the law authorising the men of the fire brigade to go upon the property of a private owner and demolish it to prevent the fire from spreading to the houses beyond or on the 662 other side of that house.
Take the case of the law authorising the seizure and destruction of property for the protection of public morality.
Although in none of the above cases there is any acquisition of property involving a transfer of title, there is in each of the above cases a "taking of possession" and destruction of property by the State by authority of law and yet nobody will say that any of the above laws authorise the "taking of possession" of the property within the meaning of article 31 (2) so that if such law does not provide for compensation the law will be unconstitutional and void.
Take the case of the Court of Wards Act.
It is a law which authorises the State to take possession of the estate of a disqualified proprietor and to manage it for him.
The State only manages the estate on behalf and for the benefit of the disqualified proprietor.
The disqualified proprietor does not appoint the State or any State official to manage his estate and he cannot dismiss or discharge the manager appointed by the State.
The possession of the manager can hardly, in such a situation, be described as the possession of the disqualified proprietor.
The disqualified proprietor is, therefore, in a sense, deprived of the possession of his estate and the State takes the estates m its possession.
The same thing may be said of the Lunacy Act.
There is no transfer of title to the State and, therefore, there is no acquisition of property by the State.
This law, however, takes the property out of the possession of the owner who is adjudged a lunatic. ' But nobody will say that the Court of Wards Act or the Lunacy Act calls for compensation.
The learned Attorney General has also drawn our attention to statutes, namely, Act XLVII of 1950 (The Insurance (Amendment) Act, 1950) passed on the 20th May, 1950, and which has added several sections to the , Act LI of 1951 (Railway Companies (Emergency Provisions) Act, 1951), passed on the 14th September, 1951, and Act LXV of 1951 (Industries (Development and Regulation) Act, 1951) enacted on the 30th October, 1951, in support of his contention.
He points out that each of those laws is :strictly Speaking outside article 31 (5) (b) and that the 663 result of our holding that the taking of possession authorised by those Acts fails within article 31 (2) so as to call for compensation will be to prevent imposition of social control so urgently necessary for the protection of the larger interests of the society.
His argument is that the taking of possession authorised by none of these three Acts fails within article 31 (2)and only illustrates the exercise of the State 's police power.
As all the three Acts were passed after the Constitution came into force and as they may be challenged in future an argument rounded on them will really be begging the question in debate before us.
I, therefore, prefer just to note the Attorney General 's contention and pass on and not to base my decision on consideration of any of those Acts.
Confining myself then to the illustrations given by me I think it is fairly clear from the foregoing discussion that none of the laws referred to above by me authorise any "acquisition" of property in the sense explained above and although each of them does authorise a sort of taking of possession of the property yet nobody can contend that the taking of possession so authorised by them fails within article 31 (2).
In other words, the taking of possession authorised by those laws does not amount to the exercise of the power of eminent domain but is the result of the exercise of police power.
It follows, therefore, that every taking of possession does not fail within article 31 (2).
What, then, is the test for determining whether a taking of possession authorised by a particular law is a taking of possession in exercise of the power of eminent domain or is a taking of possession in exercise of the State 's police power.
I have already referred to the nature of the State 's police power and quoted from some American decisions showing that the State 's police power extends not only to regulations which promote public health, morals and safety but to those which promote the public convenience or the general prosperity.
In its application to private property it, in some measure, resembles the exercise of the power of eminent domain.
Thus the police power is exercised in the interest of the community and the power 664 of eminent domain is exercised to implement a public ' purpose and in both cases there is a taking of possession of private property.
There is, however, a marked distinction between the exercise of these two sovereign powers.
According to Professor Willis at page 717 eminent domain takes property for use by the public or for the benefit of the public, while the police power prevents people from so using their own property as to injure others.
The fundamental principle which is held to justify the exercise of police power is that no one shall use his property or exercise any of his legal rights as injuriously to interfere with or affect the property or other legal rights of others.
(See Willoughby, Vol.
Ill, p. 1775).
The primary purpose of police power is protection or prevention that persons may be restrained from so exercising their private rights of property, contract or conduct as to infringe the equal rights of others or to prejudice the interests of the community.
(Willoughby, Vol.
III, p. 1783).
When the State finds that a certain public purpose needs fulfillment and then in order to implement that public purpose the State takes possession of private property on its own account after acquiring it or even without acquiring it and having taken possession of the property the State itself uses or utilises the property or makes it over to a third party to do so for implementing that public purpose which the State has taken upon ' itself to serve and for which the property was taken possession of or acquired the State is said to have exercised its power of eminent domain.
This power can only be exercised under a and that law must provide for compensation.
The point to note is that in such a case the public purpose is one which the State has set out to fulfil as its own obligation and the State takes possession on its own account to discharge its own obligation.
In police power the State destroys or extinguishes or takes possession of property in order to prevent the owner from indulging in anti social activities or otherwise inflicting injury upon the legitimate interests of other members of the community either by using his property in a manner he should not do or by omitting to use it in a manner 665 he should do.
In such a case the State steps in and destroys or extinguishes only to prevent an injury to social interest or takes possession and assumes the superintendence of the property not on its own account for implementing its own public purpose but for protecting the interests of the community.
It is easy to perceive,though somewhat difficult to express, the distinction between the two kinds of taking of possession which undoubtedly exists.
In view of the wide sweep of the State 's police power it is neither desirable nor possible to lay down a fixed general test for determining whether the taking of possession authorised by any particular law fails into one category or the other.
Without, therefore, attempting any such general enunciation of any inflexible rule it is possible to say broadly that the aim, purpose and the effect of the two kinds of taking of possession are different and that in each case the provisions of the particular law in question will have to be carefully scrutinised in order to determine in which category falls the taking of possession authorised by such law.
A consideration of the ultimate aim, the immediate purpose and the mode and manner of the taking of possession and the duration for which such possession is taken, the effect of it on the rights of the person dispossessed and other such like elements must all determine the judicial verdict.
The task is difficult and onerous but the court will have to hold the scale even between the social control and individual rights and determine whether, in the light of the constitutional limitation, the operation of the law is confined to the legitimate sphere of the State 's police power or whether it has overstepped its limits and entered into the field of eminent domain.
It is only in this way that the Court serves and upholds the Constitution by reconciling the conflicting social interests.
In the light of the foregoing discussions and the conclusions reached by me I now proceed to examine the contention.
that the impugned section 7 of the amending Act (VII of 1950) is unconstitutional 'in that it infringes Subodh Gopal Bose 's fundamental right to property guaranteed by article 31.
The argument is 6 95 S.C. India/59. 666 that having purchased the entire Touzine at a revenue sale the respondent Subodh Gopal Bose had under the old section 37 of the Act of 1859, acquired the valuable right to annul the under tenures and to eject the under tenants and that he had actually obtained a decree for ejectment but that he had been deprived of those vested rights by the operation of section 7 of the amending Act which, in effect, gave retrospective operation to the new section 37.
Assuming that the right to annul under tenures and to eject under tenants and the decree for ejectment come within the term "property", as used in article 31(2) as to which I have considerable doubts the question at once arises whether they have been taken possession of or acquired under the impugned Act.
The Touzi still remains the property of the respondent Subodh Gopal Bose.
He can realise rents and exercise all acts of ownership except that he cannot exercise the right to annul the under tenures or eject any under tenants or execute the decree he has obtained.
But have these last mentioned rights been taken possession of or acquired by the State within the meaning of article 31(2) ? There is no doubt that the State has not "acquired" these rights in the sense I have explained, for there has been no transfer, by agreement or by operation of law, of those rights from the respondent Subodh Gopal Bose to the State or anybody else.
The impugned law has not vested those fights in the State or anybody else and does not authorise the State or anybody else to exercise these rights.
Referring to the position of the shareholders under the Sholapur Spinning and Weaving Company (Emergency Provision) Act, 1950, Mukherjea J. said in his judgment in Chiranjitlal 's case (supra) at pp.
905 906 : "The State has not usurped the shareholders ' right to vote or vested it in any other authority.
The State appoints directors of its own choice but that it does, not in exercise of the shareholders ' right to vote but in exercise of the powers vested in it by the impugned Act.
Thus there has been no dispossession 'of the shareholders from their right of voting at all.
The same reasoning applies to the other fights of the 667 shareholders spoken of above, namely, their right of passing resolutions and of presenting winding up petitions.
These rights have been restricted undoubtedly and may not be capable of being exercised to the fullest extent as long as the management by the State continues.
Whether the restrictions are such as would bring the case within the mischief of article 19(1)(f) of the Constitution I will examine presently; but I have no hesitation in holding that they do not amount to dispossession of the shareholders from these rights in the sense that the rights have been usurped by other people who are exercising them in place of the displaced shareholders.
" The above reasoning applies mutatis mutandis to the case now before us.
The truth is that these rights have not been taken possession of or acquired at all in exercise of the power of eminent domain but have been extinguished or destroyed in exercise of the State 's police power to prevent public mischief and anti social activities referred to in the objects and reasons appended to the bill which eventually became the impugned law.
In the premises, the respondent Subodh Gopal Bose has been deprived of his "property", if these rights can be properly so described, by authority of law and the case fails within article 31(1) and not within article 31(2) at all.
If the impugned section is regarded as imposing a restriction on the right of Subodh Gopal Bose to hold property then, for reasons I have mentioned, I hold such restrictions, in the circumstances of this case, to be quite reasonable and permissible under article 19 (5).
If the impugned section operates as an extinguishment of his right to property, treating the right to annul under tenures and to eject under tenants and to execute the decree for ejectment as property, then, in my judgment, these rights of the respondent Subodh Gopal Bose have not been taken possession of or acquired by the State within the meaning of article 31(2) but he has been deprived of his property by authority of law under article 31(1) which calls for no compensation.
In the premises, the plea of unconstitutionality cannot prevail and must be rejected.
I 668 would, therefore, allow the appeal with costs both here ' and in the High Court.
GHULAM HASAN J. I concur with my Lord the Chief Justice that the view of the High Court, Calcutta, that section 7 of the West Bengal Revenue Sales (West Bengal Amendment) Act, 1950, is void as abridging the fundamental rights of the first respondent under article 19(1)(f)and (5) of the Constitution cannot be sustained and I agree with the order proposed by him.
JGANNADHADAS J. l have had the advantage of reading the judgments of my Lord the Chief Justice and of my learned brother Justice S.R. Das.
On the assumption that the question raised in this case is one that arises under article 19(1) (f) and (5) of the Constitution that being the footing on which the learned Judges of the High Court dealt with the case I agree with that portion of the judgment of my learned brother Justice S.R. Das which holds that the impugned section 7 of the Bengal Land Revenue Sales (West Bengal Amendment) Act, 1950 (West Bengal Act VII of 1950) is intra vires and for the reasons stated by him.
A larger question has, however, been raised as to whether this is a case which falls within the scope of article 19(1) (f) and (5) or article 31 of the Constitution.
Since, on either view, we are all agreed as to the final result of this appeal, I have felt rather reluctant to go into this larger question.
But out of profound respect for my Lord the Chief Justice and my learned brother Justice S.R. Das who have dealt with the matter fully and out of a sense of duty to the Court, I venture to express my views briefly.
My Lord the Chief Justice is inclined to the view that the fundamental right declared in article 19(1) (f) has no reference to concrete property rights but refers only to the natural rights and freedoms inherent in the status 'of a citizen.
Even so, with respect, I fail to see how the restrictions on the exercise of those fights referred to in article 19(5) can be otherwise than with reference to concrete property rights.
To me, it 669 appears, that article 19(1) (f), while probably meant to relate to the natural rights of the citizen, comprehends within its scope also concrete property rights.
That, I believe, is how it has been generally understood with out question in various cases these nearly four years in this Court and in the High Courts.
At any rate, the restrictions on the exercise of rights envisaged in 'article 19(5) appear to relate normally, if not invariably to concrete property rights.
To construe 'article 19(1) (f) and (5) as not having reference to concrete property rights and restrictions on them would enable the legislature to impose unreasonable restrictions on the enjoyment of concrete property (except where such restrictions can be brought within the scope of article 31(2) by some process of construction).
As at present advised, I am unable to give my assent to such a view.
Now as regards article 31, I agree that clause (1) cannot be construed as being either a declaration or implied recognition of the American doctrine of " 'police power".
The negative language used therein cannot, I think with respect, be turned into the grant, express or implied, of a positive power.
I need as my Lord the Chief Justice has pointed out in his judgment, no such grant of police power is necessary having regard to the scheme of the Constitution.
That scheme, as I understand it, is this.
The respective 'legislatures in the country have plenary powers assigned to them with reference to the various subjects covered by the entries enumerated in the Lists of the Seventh Schedule by virtue of articles 245 to 255.
These powers are subject to the limitation under article 13 that the power is not to be so exercised as to infringe the fundamental rights declared in Part III of the Constitution.
And, therefore, the legislatures 'can exercise 'every power including the police power, ' if it is necessary to import that concept within these : limits, in so far as it is not provided for in article 19(2) to (6) and article 31 (5) (b) (ii) or other specific provisions in the Constitution, if any.
The only problem thus presented to the Courts is not as to what is the extent of the police power, 'but as to what is the scope 670 and limit of the fundamental right which is alleged to have been infringed by legislative action.
I agree with my learned brother Justice S.R. Das that the Constitution envisages a large measure of social control a means to achieve the goal set out in the preamble and in the directive principles enumerated in Part IV.
I am also of the view that the Courts may not ignore the directive principles, as having no bearing on the interpretation of constitutional problems, since article 31 categorically states that "it shall be the duty of the State (including the legislature by virtue of the definition of 'State ' in Part III made applicable by article 36) to apply these principles in making laws".
While, therefore, I agree in thinking that a substantial measure of social control legislation may become necessary in the fullness of time, that to my mind, is no reason for construing article 31(1) as implying some undefined police power, though such a consideration may have relevance in the determination of the ambit of a fundamental right.
On the other hand, I am unable to agree with the view that article 31(1) has reference only to the power of Eminent Domain.
I do not dispute that it comprehends within its scope the requirement of the authority of law, as distinguished from executive fiat for the exercise of the power of Eminent Domain.
But it appears to me that its scope may well be wider.
This really depends on what is the exact meaning to be assigned to the word "property" as herein used and on whether "deprivation" contemplated by article 31 (I) is in substance the same as "taking possession" or "acquisition" contemplated in article 31(2).
My Lord the Chief Justice is inclined to the view that "taking possession" or "acquisition" is to be construed as having reference to and meaning "deprivation" or vice versa.
Undoubtedly "taking Possession" and "acquisition" amount to "deprivation" but the converse may not follow in the particular context in which these words and phrases are used.
With great respect, I can see no warrant for the construction adopted except the assumption that article 31(1) and article 31(2) refer to the same and identical topic of 671 eminent domain and that they provide for the different requirements thereof, i.e., the requirement authority of law under article 31(1) and the requirements of public purpose and compensation under article 31(2).
But it appears to me that if in article 31 (2) "acquisition" and "taking possession" were meant to be synonymous with "deprivation" already used in article 31 (1) there was no reason to drop the use of the word "deprivation" in article 31(2) and to use other words and phrases therein.
For instance, article 31(2) may well have run as follows.
"There shall be no deprivation of property, movable or immovable, . . for public purposes under any law 'authorising the same unless the law provides . . " or some other such clause may have been suitably drafted.
It appears to me that while the framers of the Constitution laid down the requirement of the authority of law for "deprivation of property" with a larger connotation, they limited the requirement of payment of compensation to what may reasonably be comprehended within the concepts of "acquisition" and "taking possession".
With respect, to read these words and phrases in article 31 (2) as meaning the same thing as "deprivation" used in article 31 (1) and to make the test of "substantial abridgement" or "deprivation" as the sine qua non for payment of compensation under article 31 (2) is to open the door for introduction of most, if not all the elements of wide uncertainty which have gathered round the word "taken" used in the corresponding context in the American Constitution, notwithstanding caution to the contrary which my Lord the Chief Justice has indicated in his judgment.
I am inclined to think that it is in order to obviate this that the framers of the Constitution deliberately avoided the use of the word "deprived" or "deprivation" in article 31(2).
I am conscious of the principle that a Constitution has to be liberally construed so as to advance the content of the right guaranteed by it.
But where, as in this case, there is, what appears, a deliberate choice of the language used, and where it is not unlikely that having regard to the goal that the Constitution has 672 set to itself in Part IV, certain degree of caution and restraint may well have been intended as to the limits of the right, the intendment of the language used has, in my opinion, to prevail.
On the other hand, I am unable to agree with my learned brother Justice S.R. Das that "acquisition" and "taking possession" in article 31 (2) have to be taken as necessarily involving transfer of title or possession.
The words or phrases appear to me to comprehend all cases where the title or possession is taken out of the owner and appropriated without his consent by transfer or extinction or by some other process, which in substance amounts to it, the possession in this context meaning such possession as the nature of the property admits and which the law recognises as possession.
This seems to follow from the enumeration of the classes of property in article 31 (2) to which it is applicable and also by reason of the broader consideration that from the point of view of the owner or possessor whose title or possession is appropriated, every such act of appropriation stands on the same footing.
That the idea of transference of title or possession is not necessarily to be implied by article 31 (2) appears to me to be also indicated by article 31 (5) (b) (ii), which more often than not, would cover cases of destruction of property.
Incidentally, I may mention that I am inclined to the view, in agreement with my LOrd the Chief Justice, that article 31 (5) (b) (ii) is an exception to article 31 (2) and is intended to absolve the need for payment of compensation for "acquisition" or "taking possession" of property for the purposes specified therein.
It, therefore, seems to imply payment of compensation, if such "acquisition" or "taking possession" of property is for other purposes.
The question then remains as to what is "property" contemplated by article 31 (2), apart from the specified categories included therein by enumeration in" the 'phrase "any interest in, or in any company owning, any commercial or industrial undertaking."" It is no doubt true that in a wide sense, property connotes not 673 only a concrete thing corporeal or incorporeal but all the bundle of rights which constitute the ownership thereof and probably also each individual fight out of that bundle in relation to such ownership.
But in the 'context of article 31 (2) as in the cognate context of article 19 (1)(f) the connotation of the word is limited by the accompanying words "acquisition" and "taken possession".
Hence out of the general and wide category falling within the connotation of the word "property", only that which can be the subject matter of "acquisition" or "taking possession", is the "property" which is within the scope of 'article 31(2).
This to my mind excludes, for instance, a bare individual right, out of the bundle of rights which go to make up property as being itself property for purposes of article 31 (2), unless such individual right is in itself recognised by law as property or as an interest in property an easement, a profits a prendre and the like and as capable of distinctive acquisition or possession.
Thus for instance in the case with which we are concerned in the present appeal, the right to annul under tenures cannot in itself be treated as property, for it is not capable of independent acquisition or possession.
The deprivation of it can only amount to a restriction on the exercise of the rights as regards the main property itself and hence must fail under article 19 (1) (f) taken with 19 (5), according to my understanding thereof.
In my view, however, the word "property" as used in article 31 (1) may have been intended to be understood in a wider sense and deprivation of any individual right out of a bundle of rights constituting concrete property may be deprivation of "property" which would require the authority of law.
I am aware of the possible criticism that in two parts of the same article the same word must be intended to have been used in the same sense.
While this is a normal rule of construction, it can yield to the requirement of the context arising from the ' juxtaposition of other words or phrases.
To my ' mind article 31 (1), though part of an article is in essence1 an independent provision to some extent overlapping with the requirements of the law 674 of Eminent Domain.
It is on a par with article 21.
It seems to me to serve a distinct purpose over and above that relating to the law of Eminent Domain, viz., that it relates also to deprivation of property other than that which may fall within the scope of article 31 (2).
It enjoins that such deprivation shall not be brought about save by authority of law.
In view of what I have said above, it follows that the assumption with which I have started, viz., that this is a case falling under article 19 (1) (f) and (5) is, in my opinion, correct.
In the result I agree that the appeal should be allowed with costs here and in the High Court.
Appeal allowed.
Agent for respondent No.1: R.R. Biswas.
| The first respondent B purchased a Touzi in 24 Parganas Collectorate at a revenue sale held on 9th January, 1942.
As such purchaser he acquired under section 37 of the Bengal Revenue Sales Act, 1859, the right "to avoid and annul all under tenures and forthwith to eject all under tenants" with certain exceptions which are not material here.
In exercise of that right he gave notices of ejectment and brought a suit in 1946 to evict certain under tenants including the second respondent herein and to recover possession of the lands.
The suit was decreed against the second respondent who preferred an appeal to the District Judge, 24 Parganas, contending that his under tenure came within one of the exceptions referred to in section 37.
When the appeal was pending, the Bill which was later passed as the West Bengal Revenue Sales (West Bengal Amendment) Act, 1950, was introduced in the West Bengal Legislative ASsembly on 23rd March, 1950.
It would appear, according to the "statement of objects and reasons" annexed to the Bill, that great hardship was being caused to a large section of the people by the application of section 37 of the Bengal Land Revenue Sales Act, 1859, in the urban areas and particularly in Calcutta and its suburbs where "the present phenomenal increase in land values has supplied the necessary incentive to speculative purchasers in exploiting this provision (section.
37) o/the law for unwarranted large scale eviction" and it was, therefore, considered necessary to enlarge the scope of protection already given by the section to certain categories of ,tenants with due safeguards for the security of Government revenue.
The Bill was eventually passed as the amending Act and it came into force on 15th March, 1950.
It substituted by section '4 the new section 37in place of the original section 37 and it provided by section 7 that all pending suits, appeals and other proceedings which had not already resulted in delivery of possession, shall abate.
Thereupon B contending that section 7 was void 588 as abridging his fundamental rights under article 19(1)(f) and article 31 .
moved the High Court under article 228 to withdraw the pending appeal and to determine the constitutional issue raised by him.
The appeal was accordingly withdrawn and the case was heard by Trevor Harries C.J and Banerjee J. who, by separate but concurring Judgments, declared section 7 unconstitutional and void.
They held that B 's right to annul under tenures and evict undertenants being a vested right acquired by him under his purchase before section 37 was amended, the retrospective deprivation of that right by section 7 of the amending Act without any abatement of the price paid by him at the revenue sale was an infringement of his fundamental right under article 19 (1)(f) to hold property with all the rights acquired under his purchase, and as such deprivation was not a reasonable restriction on the exercise of his vested right, section 7 was not saved by cl.
(5) of that article and was void.
The State of West Bengal preferred the present appeal to the Supreme Court: Held, per PATANJALl SASTRI C.J. Article 19 (1) (f) has no application to this case.
The word "hold" in the article means own.
The said sub clause (f) gives the citizen of India the abstract right to acquire, own and dispose of property.
This article does not deal with the concrete fights of the citizens of India in respect of the property so acquired and owned by him.
These concrete rights are dealt with in article 31 of the Constitution.
Under the scheme of the Constitution all those broad and basic freedoms inherent in the status of a citizen as a free man are embodied and protected from invasion by the State under cl.
(1)of article 19, the powers of State regulation of those freedoms in public interest being defined in relation to each of those freedoms by cls.
(2) to (6) of that article, while rights of private property are separately dealt with and their protection provided for in article 31, the cases where social control and regulation could extend to the deprivation of such rights being indicated in para.
(ii) of sub clause (b) of cl.
(5) of article 31 and exempted.
from liability to pay compensation under cl.
Held, per PATANJALI SASTRI C.J. (MEHR CHAND MAHAJAN ' and GHULAM HASAN JJ.
concurring) (i) Article 31 protects the right to property by defining the limitations on the power of the State to take away private property without the consent of the owner.
Clauses (1) and (2) of article 31 are not mutually exclusive in scope and content, but should be read together and understood as dealing with the same subject, namely the protection of the right to property by means of limitations on the State 's power referred to above, the deprivation contemplated in clause (1) being no other than the acquisition or taking possession of the property referred to in cl.
The words "taking of . . possession or . . acquisition" in article 31(2) and ' the words "acquisition or requisitioning" in entry 589 No. 33 of List I and entry No. 36 of List II as also the words "acquired or requisitioned" in entry No. 42 of List III are different expressions connoting the same idea and instances of different kinds of deprivation of property within the meaning of article 31(1) of the Constitution.
No cut and dried test can be formulated as to whether in a given case the owner is "deprived" of his property within the meaning of article 31; each case must be decided as it arises on its own facts.
Broadly speaking it may be said that an abridgement would be so substantial as to amount to a deprivation with in the meaning of article 31, .if, in effect, it withheld the property from the possession and enjoyment of the owner, or seriously impaired its use and enjoyment by him or materially reduced its value .
The expression "taking possession" in art 31(2) of the Constitution can only mean such possession as the property taken possession of is susceptible to and need not be actual physical possession. ' (ii) It is difficult to hold that the abridgement sought to be effected retrospectively of the rights of a purchaser at a revenue sale is so substantial as to amount to a deprivation of his property within the meaning of article 31(1) and (2).
No question accordingly arises as to the applicability of el.
5(b)(ii) of article 31 to the Per DAs J. (1) The abridgement of the rights of the purchaser at a revenue sale brought about by the new section 37 amounts to nothing more than the imposition of a reasonable restriction on the exercise of the right conferred by article 19(1)(f)in the interests of the general public and is perfectly legitimate and permissible under cl.
(5) of that article.
It is well settled that the statement of objects and reasons is not admissible as an aid to the construction of a statute but it can be referred to only for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill .to introduce the same and the extent and urgency of the.
evil which he.
sought to remedy.
Those are matters which must enter into the judicial verdict as to the reasonableness of the restrictions which article 19(5) permits to be imposed on the exercise of the right guaranteed by article 19(1)(f).
(II) The correlation between article 19(1)(f) and article 31 is that if a person loses his property by reason of its having been compulsorily acquired under article 31 he loses his right to hold that property and Cannot complain that .his fundamental right under article 19(1)(f)has been infringed.
The rights enumerated in article 19(1) subsist while the citizen has the legal capacity to exercise them.
A.K. Gopalan 's case ; and Chiranjit Lal 's case ; referred to.
590 For the purpose of this appeal the.
matter proceeds on the footing that article 19 relates to abstract right as well as to right to concrete property.
(III) The true scope and effect of cls.
(1) and (2) of article 31 is that cl.
(1) deals with deprivation of property in exercise of police power and enunciates the restrictions which our Constitution makers thought necessary or sufficient tO be placed on the exercise of that power, namely, that such power can be exercised only by authority of law and not by a mere executive fiat and that cl.
(2)deals with the exercise of the power of eminent domain and places limitations on the exercise of that power.
These limitations constitute our fundamental rights ' against the State 's power of eminent domain.
(IV) Both these clauses cannot be regarded as concerned only with the State 's power of eminent domain, because then (a) cl (1) would be wholly redundant, for the necessity of a law is quite clearly implicit in cl.
(2) itself; (b) deprivation of property otherwise than by taking of possession ' or acquisition of it will be outside.
the pale of constitutional protection: (c) there will beno protection against the exercise of police power in respectOf property either by the executive or by the legislature.
Chiranjit Lals case ; and The Bihar Zamindari case referred to.
(V) The State 's police power is not confined (a) within the ambit of article 19 forto say otherwise ,will mean: (i) that there is no protection for any person, citizen or non citizen, against exercise of police power by the executive over property; (ii) that although in cls.
(2) to (6) there is protection against ' (iei) legislature in respect of "restriction" there is no protection against "deprivation"; or (h) within d. (5) (b) of article 31 because to say otherwise will mean :__ (i) that the police power which is inherent in sovereignty and does not require express reservation has been unnecessarily defined and reserved; (ii) that the Constitution does not prescribe any test for the 'validity of the laws which fail within the clause and, therefore, the law failing within the clause may be as archaic, offensive and .
unreasonable as the legislature may choose to make it; (iii) that the clause gives no protection against the executive; (iv) that the exercise of the police power by the legislature is confined within ' the very narrow and inelastic limits of the clause and that no beneficial or social legislation involving taking 591 of property can be undertaken by the State if the law falls outside the clause except on terms of payment of compensation; (v) that acqUiSition Of property for which compensation is Usually provided, e.g.; acquisition of land for a public park, hospital Or z 'dearing a slum area will henceforth be permissible without the law providing any compensation; (VI) The argument that if article 31(1) is read as a fundamental right against deprivation of property by the executive and article, 31(2) as laying down the Iimits of State 's power of eminent domain then there will be no real protection.
whatever, for the State will deprive a person of his property without compensation by simply making a law is not tenable because (i) there will certainly be protection against the execute just as the 29th clause of the Magna Charts was a protection against the British Crown; (ii)" 'there is protection under article 31(2) against the legislature in the matter of taking of possession Or.
acquisition for compensations to be given and under cl.
(5) of art, 19 against unreasonable ' restraint: (iii) the absence of protection against the legislature in other cases is not greater than the absence of protection against the legislature in respect of taxation and if the legislature can be trusted in the latter case it may equally he ' trusted in the former case.
(VII) Every taking of a thing into the custody of the State or its nominee does not necessarily mean the taking of possession Of that thing within the meaning of art 31(2) so as to call for compensation.
The police power is exercised in the interest of the community and the power of eminent domain is exercised to .
implement a public purpose and in both cases there is a taking of possession of private, property There is however a marked difference between the exercise of these two sovereign powers.
It is easy to perceive, though somewhat difficult to express, the .distinction between the two kinds of taking of possession which undoubtedly exists.
In view of the wide sweep of the State 's police power it is neither desirable nor possible to lay down a fixed general test for determining whether the taking of possession authorised by any particular.
law falls within one category or the other.
Without, therefore, attempting any such 'general enunciation of any inflexible rule it is possible to say broadly that the aim, purpose and the effect of the two kinds of taking of possession are different and that .
in each "case the provisions of.
the particular law in question" will have to 'be carefully scrutinised in order to determine in which category ' falls the taking of possession authorised by such law. = A consideration of the ultimate aim, the immediate purpose ::and the mode and manner of the taking 'of possession and, the duration". 'for which such possession . is taken, the effect of ' it ' on the rights of 'the person dispossessed and other such like elements must all determine the judicial verdict.
592 (VIII) Treating the right to annul under tenures and to eject under tenants .and decree for ejectment as "property" as used in article 31(2) the State has not acquired those rights for there has been no transfer by agreement or by operation of law of those rights from the respondent B to the State or anybody else.
The purchase being at a Revenue sale to.
which West Bengal Act VII of 1950 applies, the purchaser of the property has been deprived of this right by authority of law and the case falls within cl.
(1) of article 31 and no Within cl.
(2) of article 31.
If the impugned section is regarded as imposing restrictions on the purchaser, such restrictions in the circumstances of the case are quite reasonable and permissible under article 19(5) and, in the premises, the _plea of unconstitutionality cannot prevail and must be rejected.
Pet ' JAGANNADHADAS J. (i) On the assumption that the question raised in this case is one that arisesunder article 19(1)(f)and (5) of the Constitution, the impugned section of the West Bengal Act VII of 1950 is intra vires because the restrictions are reasonable within the meaning of article 19(5) of the Constitution; (ii) that article 19(1)(f) while probably meant to relate tot he natural rights of the citizens comprehends within the scope also concrete property rights.
The restrictions on the exercise of rights envisaged in article 19(5) appear to relate normally, if not invariably to concrete property rights; (iii) that cl.
(1).of article 31 cannot be construed as being either a declaration or implied recognition of the American doctrine of "police power".
It comprehends within its scope the requirement of the authority of law, as distinguished from executive fiat for the exercise of the power of eminent domain, but its scope may well be wider.
"Acquisition" and "taking possession" in article 31(2) cannot be taken as necessarily involving transfer of tide or possession.
The words or phrases comprehend all cases where the title or possession is taken out of the owner and appropriated without his consent by transfer or extinction or by some other process, which in substance amounts to it, the possession in this context meaning such possession as the nature of the property admits and which the law recognizes as possession.
(iv) In the context of article 31(2) as in the cognate context article 19(1)(f) the connotation of the word "property"is limited by the accompanying words "acquisition" and "taking possession".
In the present.
case the right to annul under tenures cannot in itself be treated as property for it is not capable of independent acquisition or possession.
The deprivation of it can only amount to a restriction on the exercise of the fights as regards the main property itself and hence must fall under article 19(1)(f) taken with 19(5).
Butchers Union etc.
Co. vs Crescent City etc.
Co.; , , Punjab Province vs Daulat Singh and Others ([1946] F.C.R. 1), Chiranjit Lal Chauduri vs The Union of India and Others ([1950] S.C.R. 869), A.K. Gopalan vs The State of Madras ([1950] S.C.R. 88), P.D. Shamdasani vs Central Bank of India ([1952] S.C.R. 391), Ministry of State.
for the Army vs Dalziel ; , Pennsylvania Coal Co. vs Mahou , Dwarkadas Shrinivas vs Sholapur Spinning and Weaving Mills Ltd. ([1954] S.C.R. 674), ' State of Madras vs V.G. Row ([1952] S.C.R. 597), Ram Singh vs The State of Madras ([1951] S.C.R. 451), State of Bihar vs Maharajadhiraja Kameshwar Singh of Darbhanga ([1952] S.C.R. 889), Noble State Bank vs Haskeli ; , Eubank vs Richmond (226 U.S. 137), Ioseph Hurtado V. People of California (1883) (10 U.S. 516), referred to.
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O. 324 of 1953 under article 32 of the Constitution.
N. section Bindra, (Gurucharan Singh Bakshi, with him) for the petitioners.
Porus A. Mehta for respondent No. 1.
Amar Nath Arora for respondents Nos. 2 to 14.
December 18.
The Judgment of the Court was delivered by GHULAM HASAN J.
This petition by twenty persons under article 32 of the Constitution prays for the issue of a writ of certiorari, mandamus and prohibition 579 or other suitable order or directions, quashing the orders dated the 1st July, 1952, and the 14th October, 1953, passed by the Deputy Commissioner (Deputy Custodian Evacuee Property) Karnal, in the State of East Punjab, hereinafter referred to as the first respondent, whereby the petitioners are alleged to have been deprived of their fundamental right of property and are unable to hold the same within the meaning of article 19 (1) (f) of the Constitution.
The petitioners are displaced persons from Pakistan who migrated to India after the partition of 1947.
They owned certain agricultural land in Tehsil Chunian, District Lahore, which, according to them, was mostly canal irrigated land of the first grade, yielding on an average 16 to 20 maunds of wheat per acre.
It appears that upon partition the East Punjab Government was confronted with the serious problem of settling agricultural lands abandoned by Muslim evacuees from the areas, now called East Punjab and Pepsu.
Accordingly they decided on the 15th September, 1947, to allot evacuee lands for the current Kharif and the Rabi of 1947 48.
This decision was obviously taken with a view to prevent famine and fall in agricultural production in the area, as also to provide means of livelihood for the agricultural refugees.
In pursuance of this policy the petitioners were settled on land in village Dhakala admittedly a first grade village, Tehsil Thanesar, District Karnal, in the State of East Punjab.
Their claims were verified under the provisions of the.
East Punjab Refugees (Registration of Land Claims) Act XII of 1948, They were allotted specific areas of land under the statement of conditions, contained in Notifications Nos.489 1/S and 4892 IS, dated the 8th July, 1949, on quasi permanent basis in lieu of the lands left by them in Pakistan.
Subsequently the petitioner 's lands left in Pakistan are alleged to have been down graded with the result that the lands allotted to them were re allotted on the 25th April, 1951, to Ishar Singh and others who appear as respondents to oppose the present petition.
In July, 1951, the petitioners moved the East Punjab High Court under article 226 for a writ restraining their 76 eviction from the lands but as no allotment had been cancelled by that time they withdrew the petition some time in 1952.
The original allotment was, however, cancelled on the 1st July, 1952.
This order was challenged by a revision under section 27 of the .
The Deputy Custodian General dismissed the revision petition on the 2nd December, 1953, holding that the order of the Deputy Custodian was not illegal or without jurisdiction on the ground that no notice of cancellation of allotment had been issued to them.
It was observed in the course of the judgment that the petitioners had conceded before the Assistant Custodian on the 9th May, 1952, that the lands abandoned by them in Pakistan were second grade lands but had claimed that they should, nevertheless, be allotted first grade lands.
The order of the 1st July, 1952, is the first order which is challenged before us as being without jurisdiction and infringing the fundamental right of the petitioners.
It is alleged in the petition that notwithstanding the cancellation of the allotment, the petitioners remained in actual cultivating possession of the lands allotted to them but an order was passed by the first respondent on the 14th October, 1953, which is to the following effect : " Government have decided that in the case of persons who were able to secure possession of part of land, the order should be deemed to have been implemented.
In the case of M/s Ishar Singh.
Rakha Singh and others of the village Dhokala ' they were in possession of the part of the land before the 6th May, 1953.
As such they should be given possession of the remaining area by ousting Duni Chand and others being II and III grade allottees, but wrongly allotted land in 1st grade village.
" The aforesaid order is said to have been passed without the authority of law and deprives the.
petitioners of their right to bold the property allotted to them, 581 Before dealing with the validity of the impugned orders it will be necessary to refer to a compilation known as the Land Resettlement Manual for displaced persons in Punjab and, Pepsu upon which great reliance was placed by Mr. Bindra on behalf of the petitioners in the course of his arguments.
This book was prepared by Mr. Tirlok Singh, I.C.S., who was Director General of Relief and Rehabilitation in East Punjab and contains the policy decisions of that Government arrived at in respect of the settlement of land upon the refugees soon after partition.
It appears from this book that originally there was a temporary settlement but shortly afterwards an elaborate organization was set up to make allotment of lands on a quasi permanent basis.
The displaced persons put in their claims in regard to the agricultural land they had abandoned in West Punjab and they were verified with the help of Revenue records which were exchanged with the West Punjab Government.
The book has evidently the stamp of authority, as the foreword is written by Mr. P. N. Thapar, I.C.S., Financial Commissioner, Department of Relief and Rehabilitation, and Secretary to the Punjab Government, Relief and Rehabilitation Department.
The Manual shows that in the end.
of 1947, the displaced persons had been allotted lands on a temporary basis but there was an insistent demand for settlement on permanent basis.
In a communique of the 7th February, 1948, a new system of quasipermanent allotment was devised, the object underlying being to allow the displaced persons to remain in quiet and undisturbed enjoyment of the lands allotted to them.
They were not to get proprietary rights or rights of permanent occupation and the very fact that the settlement was quasi permanent shows that it was, not intended to be irrevocable.
, Paragraph 19 of the Manualsays: "Until issues relating to evacuee property are resolved between India and Pakistan, ownership in each country of property abandoned by evacuees continues to rest with them.
This led to the use of the expression quasi permanent as the keyword for the scheme of resettlement introduced in East Punjab and Pepsu.
" The various Evacuee Property Ordinances 582 passed by the Central or the State Governments from time to time which were eventually replaced by the Central Act No. XXXI of 1950, further confirm that the policy underlying the legislation was to provide for the administration of evacuee property for the time being and to manage it until such time as a final decision was reached by the Government of India as to its ultimate destination.
Paragraph 21 of the Manual contains the statement of conditions which Mr. Bindra characterised as the charter of the petitioners ' rights.
This paragraph says that the rights of persons to whom land is given in the scheme of quasi permanent resettlement are defined in East Punjab in two statements of conditions, dated the 8th July, 1949, issued with Notifications Nos.4891/Sand4892/S.
This statement is to be found at page 193 of the Manual.
Paragraph 3 of the statement says that the allotment shall be in favour of displaced persons and for a period for which the land remained vested in the Custodian subject to the provisions of the Act.
Paragraph 8 says: "The allottee paying the rent hereby reserved and observing and performing the several covenants, conditions and stipulations herein on his part contained, shall peace fully hold and enjoy the allotted land during the said term without any interruption by the Custodian or the Rehabilitation Authority.
" It is contended by Mr. Bindra on the strength of these provisions that so long as the land remains vested in the Custodian, the petitioners cannot be deprived of these lands which have been granted to them on a quasi permanent basis and that the allotment could not be cancelled without notice to the petitioners.
We now proceed to dispose of this contention.
It is agreed that the Act in force at the time of the allot.
ment was the East Punjab Evacuees ' (Administration of Property) Act, XIV of 1947.
It defines "allotment" as the grant by the Custodian or a Rehabilitation Authority or any other person duly authorised by the Custodian in this behalf, of a temporary right of use and occupation of evacuee property to any person otherwise than by way of lease.
Section 9 confers powers upon the Custodian in regard to management 583 of property and section 9 (A), sub section (2), empowers the Custodian to cancel any allotment or terminate or amend the conditions of any lease.
Section 22, subsection (2) (ff) confers upon the Provincial Government the power to make rules providing for the circumstances under which leases and allotment may be terminated or the terms thereof be varied.
This Act was in due course replaced by the Central Act XXXI of 1950 (The ).
The definition of allotment in this Act is substantially the same [section 2 (a) ].
Section 12 (1) and section 56 (2) (h) are in substance the counterpart of section 9 (A) and section 22 (ff) of the East Punjab Act of 1947.
That the Deputy Custodian had the jurisdiction to cancel the allotment both under the State and the Central Acts referred to above cannot be seriously contested.
It was in pursuance of the powers conferred by the rules made by the Provincial Government that the Custodian issued the notification of 8th July, 1949.
Rule 14 (2) which is one of the rules framed under section 56, specifies the circumstances under which leases and allotments can be cancelled or varied.
Sub rule (3) says that the Custodian may evict a person who has cured an allotment by misrepresentation or by fraud or if he is found to be in possession of more than one evacuee property or in occupation of accommodation in excess of his require ments.
Sub rule (4) requires the Custodian before passing any, order of cancellation or variation of the terms of a lease, to serve the person or persons concerned with a notice to show cause against the order proposed to be made and to afford him a reasonable opportunity of being heard.
No notice is provided for cancellation of an allotment under the rules.
The obvious answer to this differentiation appears to be that a lease is granted for a definite period and it is only fair to give the lessee a notice before his lease is terminated before the expiry of the stipulated period, whereas the allottee of land under the quasi permanent settlement stands on a different footing.
Be that as it may, the question seems to be academical in the present case, as the petitioners were given full opportunity to, 584 put forward their case before the allotment was cancelled.
The order of the Deputy Custodian General, dated the 2nd December, 1953, rejecting the petitioners ' revision supports this.
That order shows that the Assistant Custodian issued a notice to the petitioners to show cause why the allotment of first grade land, while they were all second grade claimants, should not be cancelled.
The petitioners appeared before him on the 9th May, 1952.
Their 'statements were recorded and they admitted that their land was second grade, whereupon the Assistant Custodian made a report to the Deputy Custodian recommending that the allotment be cancelled.
The Deputy Custodian acting upon this, report cancelled the petitioners ' allotment in village, Dhakala, on the 1st July, 1952.
This point was raised before the Deputy Custodian General also but he held that section 12 of the Central.
Act did not require notice of cancellation to be issued to the petitioners and in any case the order in question was not without jurisdiction, as there had been substantial compliance with the provisions of rule 14.
It was contended, however, that the order of cancellation was made by the Deputy Custodian and that order was bad as he did not give the petitioners any notice before passing the order.
The Assistant Custodian who was acting under the orders of the Deputy Custodian had already heard ' the petitioners and recorded their statements, and there was no point in hearing the petitioners again when they had already been heard.
The Deputy Custodian has filed an affidavit to the effect that a notice was given to the petitioners to explain on the 9th May, ' 1952, as to why their allotment should not be cancelled, that they appeared on the 9th May, 1952, that their statements were recorded and that their allotments were cancelled on the 1st July, 1952.
We hold, therefore, that there is no merit in the contention that the order of the Deputy Custodian was without jurisdiction as it was passed in the absence of the petitioners and without hearing them.
Even if the order of cancellation was passed during ' the 585 operation of a stay order, the order of cancellation cannot be challenged on that ground.
The next contention urged is that the order of cancellation is opposed to the order of the Ministry of Rehabilitation, dated the 14th May, 1953, whereby the authorities were prohibited from cancelling allotments if the orders in respect of them had not been implemented by the 22nd July, 1952.
We think this contention is also devoid of merit.
It appears that the question of amendment of sub rule (6) of rule 14 of the Central Rules was the subject of correspondence between the Central Government and the East Punjab Government.
Reference is made in the letter of the 14th May, 1953, to a notification issued by the Central Government on the 22nd July, 1952, according to which orders cancelling allotments passed after a specified date were to be implemented only if they fall under the category of undeserved and excessive allotments.
It is stated that the object of this notification was to stablize quasi permanent allotments, but upon a representation by the State Government the provision restricting the implementation of orders passed before the a specified date was relaxed and the State Government was given powers to implement their orders by the 22nd July, 1952.
The Central Government after further consideration decided that all orders passed before the 22nd July, 1952, but not implemented until the 6th May, 1953, shall be kept it abeyance except in the following cases: (a) Undeserved allotment, (b) Excessive allotment, (c). . . . .
It was further decided that no other order hereafter be implemented until a decision to the contrary is issued by the Central Government.
The letter added that the Ministry of Law was being consulted with a view to making the necessary amendments in the rules.
In pursuance of this, decision the East Punjab Government issued instructions to the Deputy Commissioners.
There was some dispute about the meaning of the wor "implementation" but before A further 586 reference was made to the Central Government, the Punjab Government decided that among allottees of land the status quo should be maintained and that if as a result of an order of cancellation passed before the 22nd July, 1952, the possession of an allottee had not been given over by the 6th May, to the new allottee, it shall remain with the original allottee.
This correspondence merely shows that the Central Government enunciated a certain policy on the subject of amending sub rule (6) of rule 14, pending the advice of the Law Ministry, but apparently the policy was not given effect to and no rule was framed in pursuance of the decision.
It is clear, therefore, that the Central Government .merely issued interim instructions pending the amendment of the rule but no rule was framed to give effect to those instructions which in consequence did not acquire any statutory force.
Mere stay of implementation of the orders contained in the statement of policy did not wipe out the effect of the cancellation.
Sub rule (6) to rule 14 was subsequently added but not as it was intended to be with the result that the old orders of cancellation stood such as orders based on grounds other than underserved or excessive allotments.
Once the order of cancellation was passed by the Deputy Custodian, the petitioners lost their right to possession and even if the letter of the 14th May, 1953, is treated as a direction by the Central Government under section 54, it cannot have the effect of restoring what had been lost.
We hold, therefore, that the petitioners have not made out a case for breach of any fundamental right.
Both the orders passed by respondent No. I are perfectly valid and within jurisdiction.
We accordingly ' dismiss the petition with costs to the first respondent.
Petition dismissed.
Agent for the petitioners: Harbans Singh.
Agent for respondent No. 1: G. H. Rajadhyaksha.
| Held, that the Deputy Custodian of Evacuee Property has jurisdiction to cancel the allotment of land both under the East Punjab Evacuees ' (Administration of Property) Act, XIV of 1947 as well as under the Administration of Evacuee Property (Act XXXI of 1950), sections 2(a) 12(1) and 56(2), the latter Act replacing the former Act.
That no notice was provided for cancellation of an allotment under the rules framed under section 56.
That the petitioners allottees in the present case were given notice and had full opportunity to put forward their case before their allotments were cancelled.
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Subsets and Splits